Dapho's Optical Communication Business Explodes: Revenue Expected to Quadruple This Year and Triple Again Next Year

Dapho (6526-TW) held an investor briefing today (4th), where Executive Vice President and Spokesperson Hsieh Meng-Han stated that third-quarter operations will continue to grow. Notably, visibility for the optical communication business has further improved compared to last quarter, with revenue expected to grow 'over four times' in 2026 compared to 2025. Driven by single-lane 100G products, this growth momentum is expected to extend into 2027, with optical communication revenues potentially growing 'more than three times' in 2027 compared to 2026.

Dapho achieved second-quarter revenue of NT$6.29 billion, up 13.9% year-on-year and 15.3% quarter-on-quarter, setting a new all-time high for quarterly revenue. 2026 marks a pivotal year for Dapho as it achieves key progress in the 'structural transformation' of its product portfolio. Both major business groups have successfully expanded their addressable markets, opening new growth opportunities for the company.

In the wired network infrastructure sector, Dapho’s high-speed transmission and connectivity technologies have entered the supply chains of AI infrastructure and major CSPs, driving AI data center-related revenues into an accelerated expansion phase. In the wireless Edge AI domain, beyond focusing Bluetooth audio products on premium applications, Dapho has successfully extended Bluetooth technology into the widely applicable Bluetooth data transmission field, aiming to expand into B2B commercial markets.

Regarding the much-anticipated progress in optical communications, Hsieh noted that within the wired network infrastructure business group, demand for pluggable optical transceiver modules continues to rise across the market. Dapho’s focus on PAM4 DSP combined with TIA solutions has resulted in shipment performance exceeding expectations.

Given strong customer procurement momentum, visibility for Dapho’s optical communication business has improved further from last quarter. Revenues in 2026 are projected to grow 'over four times' compared to 2025. Moreover, driven by single-lane 100G products, this growth momentum will extend into 2027, with Dapho expecting optical communication revenues in 2027 to potentially grow 'more than three times' compared to 2026.

Hsieh explained that the primary growth drivers stem from critical progress in volume production for both existing single-lane 50G products and newly launched single-lane 100G products. For single-lane 50G, volume shipments continue to scale under collaboration with top ten global module manufacturers. Demand from North American end customers has rebounded, and major CSP projects are scheduled to begin formal shipments in the second half, further boosting revenue.

Meanwhile, Dapho’s single-lane 100G products have secured design wins with multiple module manufacturers and are entering mass production, ushering in a new wave of growth for its optical communication business. Additionally, to accelerate product upgrades and capture mid-to-long-term growth opportunities, the development of single-lane 200G SerDes IP is complete. The company is now focusing on optimizing power consumption using advanced process nodes, while corresponding TIA products are under concurrent development.

In the broadband and Ethernet product lines, Dapho is expanding from traditional networking markets into AI data center markets. Broadband deployments in Europe and the US continue to gain traction, driving steady shipment growth. Benefiting from specification upgrade demands from multiple global leading operators, 10G-PON has shown the strongest growth, with continuous optimization of the product mix. The next-generation 25G-PON product is progressing smoothly through testing and validation at U.S.-based customers, with mass production expected in 2027—marking a significant milestone in Dapho’s broadband technology evolution.

As AI server computing scales continue to rise, ensuring uninterrupted access to core computing has shifted facility management requirements from basic maintenance to Out-of-Band (OOB) management architectures centered on BMC (Baseboard Management Controllers). To meet CSP demands for reduced cabling space and lower power consumption, Dapho has successfully collaborated with a U.S. customer to integrate its 10G-PON fiber 'one-to-many' technology into OOB architectures, gaining entry into major CSP supply chains.

According to customer test data, Dapho’s solution offers a core advantage: saving 99% of management rack space in AI data centers, simplifying physical cabling, and reducing management power consumption. This enables customers to deploy more AI computing nodes within limited rack space, and adoption rates of this innovative architecture among CSPs are expected to continue rising.

On the Ethernet front, revenue continues to expand, driven by both PHY and switch products. Dapho’s PHY chips serve as a critical communication interface, transmitting management signals between BMC and PON within OOB architectures, enabling simultaneous entry into major CSP supply chains.

In the low Earth orbit (LEO) satellite segment, as customers accelerate deployment of ground receiving equipment and expand into enterprise commercial applications, corresponding transmission specification requirements are upgrading, driving increased shipments of 1G and 2.5G PHY chips. Meanwhile, Dapho’s unmanaged switch products continue to gain market share, and rising demand for light-managed switch models has made switch (Switch) chips a key growth engine for Ethernet business this year.

For the wireless Edge AI business group, Dapho has cultivated the business headset segment in Bluetooth audio for years, and this year marks the harvest phase, with relevant projects rolling out. In the first half of 2026, revenue from 'business headsets' is expected to more than double compared to the same period in 2025. The proportion of high-end applications continues to increase, lifting the average selling price (ASP) and driving stable revenue growth across the entire Bluetooth audio business.

Beyond Bluetooth audio, Dapho has successfully extended Bluetooth communication from 'audio/voice transmission' to 'data transmission,' opening broader new application markets. In the Bluetooth data transmission domain, Dapho strategically focuses on high-end applications and maintains close partnerships with the world’s top three esports brands, with increasing design wins for premium keyboards, mice, and joystick controllers. The company also sees strong potential in the B2B commercial market, particularly in ESL (Electronic Shelf Labels), which is expected to provide steady mid-to-long-term growth momentum for the wireless Edge AI business group.

Regarding overall revenue outlook, with AI infrastructure-related products in the wired network business group ramping up volume production, and new products like business headsets in the wireless Edge AI group entering mass production, Dapho expects its overall revenue to continue growing steadily in the third quarter.