01

Market Updates（August.5）

Reports: U.S. FCC Drafting New Rules to Restrict Imports of Next-Generation High-Speed Optical Modules from China, Potentially Triggering Blowback amid Supply Chain Interdependence

According to media reports, the U.S. Federal Communications Commission (FCC) is drafting an internal regulatory proposal that would restrict imports of next-generation high-speed data center optical transceiver modules manufactured in China. The proposed restrictions are reportedly focused on new products such as 1.6T and 3.2T optical modules for AI compute clusters, while mature 800G products that have already received certification would temporarily remain unaffected. The draft has not yet been formally released and could still be revised, scaled back, or even shelved, as geopolitical technology competition continues to spread from chip manufacturing into optical communications infrastructure. Chinese optical module manufacturers, including Zhongji Innolight, Eoptolink Technology, Accelink Technologies, and HG Genuine, collectively account for nearly two-thirds of global optical module supply and approximately 60% of global optical datacom transceiver revenue. Zhongji Innolight leads the global data center optical transceiver market with a revenue share of approximately 27%, while Eoptolink Technology ranks third. If the proposed restrictions are fully implemented, Western suppliers may lack sufficient cleanroom capacity, automated packaging infrastructure, and manufacturing yields at scale to replace Chinese production in the short term. This could delay the commercial rollout of 800G/1.6T AI clusters by several quarters and push up bill-of-materials (BOM) costs for hyperscale data centers. At the same time, more than 90% of Chinese module manufacturers’ revenue from high-value 800G and 1.6T products comes from overseas buyers, meaning such restrictions would directly hit their core revenue base. To mitigate trade risks, manufacturers including Zhongji Innolight and Eoptolink Technology have already established high-capacity automated production lines in Thailand and are actively expanding their manufacturing footprint outside mainland China.

Commentary: The reported U.S. draft restrictions on optical module imports represent an extension of technology supply chain “de-risking” controls from chip export restrictions into optical communications infrastructure. However, unlike the semiconductor sector, where the United States holds advantages in key upstream technologies, the optical module supply chain is highly interdependent. China controls approximately two-thirds of global packaging and manufacturing capacity, while the supply of core components for high-end optical modules, including DSPs and lasers, still depends heavily on suppliers such as Broadcom, Marvell, Lumentum, and Coherent. If the restrictions are implemented, they would disrupt a deeply integrated global supply chain, making unilateral decoupling difficult to achieve.

From a market impact perspective, the potential “blowback effect” of such restrictions could be more pronounced than that of chip controls. U.S. hyperscale data center operators are accelerating their migration toward 800G/1.6T high-speed optical interconnects to overcome the “copper interconnect bottleneck,” while Chinese suppliers hold a dominant position in this market. Western suppliers would be unable to fill the capacity gap in the short term, potentially leading directly to delays in AI cluster deployment and sharply higher costs. For Chinese optical module manufacturers, their heavy reliance on overseas markets means they could face significant short-term pressure. However, capacity expansion in Southeast Asia provides some buffer against trade risks. The ultimate outcome of this contest will depend on which side can better absorb the cost of supply chain disruption. In the highly interdependent optical module sector, the actual effectiveness of unilateral restrictions may fall well short of policymakers’ expectations.

02

Company Updates（August.5）

Samsung Electronics and SK Hynix Reportedly Evaluating AMEC Etching Equipment as Backup Option for China Fabs

According to Reuters, citing three anonymous sources familiar with the matter, South Korea’s Samsung Electronics and SK Hynix are reportedly evaluating chipmaking equipment from China’s Advanced Micro-Fabrication Equipment Inc. (AMEC) as a backup option for their fabs in China. The sources said the two companies reportedly began testing and evaluating the equipment around two years ago. Samsung Electronics subsequently issued an official statement denying the report, saying it has neither tested AMEC equipment for use at its China fabs nor considered such plans. SK Hynix has not commented on the report. As U.S. semiconductor restrictions continue to tighten, the two South Korean companies are concerned that future restrictions could extend beyond purchases of new equipment to the repair, maintenance, and replacement of spare parts for Western equipment already installed on their production lines in China. Against this backdrop, some industry observers believe the companies may be seeking Chinese-made equipment as a backup option for maintaining existing production lines, rather than for expanding capacity in China. Samsung currently operates a NAND flash memory fab in Xi’an, while SK Hynix operates NAND and DRAM memory fabs in Dalian and Wuxi, respectively.

Commentary: Reports that South Korean companies are evaluating Chinese-made etching equipment reflect the “long-arm effect” of U.S. semiconductor export controls extending beyond domestic Chinese fabs to foreign-owned fabs operating in China. Samsung’s Xi’an fab and SK Hynix’s Dalian and Wuxi fabs represent major memory production bases, with their production lines heavily reliant on overseas equipment suppliers such as Applied Materials and Lam Research. As restrictions continue to tighten, the manufacturers’ core concern is not the procurement of new equipment, but the potential risk of disruptions to maintenance, servicing, and spare-parts supply for equipment already installed on existing production lines, which could directly affect stable and continuous fab operations.

Including Chinese-made equipment in evaluation programs would be a contingency option for foreign manufacturers seeking to balance compliance requirements with operational continuity. AMEC’s etching equipment has already achieved mature commercial deployment at multiple Chinese fabs. If it can subsequently pass comprehensive qualification by leading international chipmakers and enter their supply chains, it would mark a major breakthrough for Chinese semiconductor equipment suppliers in penetrating top-tier global customers. However, Samsung’s official denial that it has conducted such equipment testing indicates that the reports remain at an early and unconfirmed stage, with considerable distance still to go before any large-scale adoption could occur. From an industry trend perspective, the continued tightening of U.S. export controls is objectively accelerating the diversification of global semiconductor supply chains. Not only are Chinese fabs advancing domestic equipment substitution, but foreign-owned fabs in China are also beginning to prepare alternative equipment options. This could create an entry window for Chinese semiconductor equipment companies into international supply chains, although sustained improvements in product performance and reliability to world-class levels will remain essential over the long term.

03

Company Updates（August.6）

Nokia Acquires NXP Semiconductor Fab in the U.S. to Expand InP Capacity, Strengthening In-House Production of Core Optical Communications Components

Recently, Nokia announced the acquisition of NXP’s semiconductor fab in Chandler, Arizona, with plans to convert the facility into an indium phosphide (InP) semiconductor production line to strengthen its in-house manufacturing capabilities for optical communications components. Nokia CEO Justin Hotard said the acquisition is intended to secure additional capacity to meet the company’s own needs while preserving greater flexibility for customers amid severe market supply constraints. Under the plan, Nokia will begin leasing part of the facility early next year and convert it into a production line for InP semiconductor optical devices. The company will subsequently acquire the entire site, with the transaction expected to be formally completed in the first quarter of 2029. Last year, through its acquisition of optical networking equipment maker Infinera, Nokia gained an InP wafer fab in California and a back-end packaging facility in Pennsylvania. The company is now actively investing to expand the packaging facility’s capacity tenfold.

Commentary: Nokia’s acquisition of NXP’s U.S. InP fab represents another major move to deepen its presence in core optical communications components following its acquisition of Infinera. Indium phosphide is a key substrate material for high-speed optical modules, coherent optical communications, and optical interconnects in AI data centers. Against the backdrop of surging demand for 800G and 1.6T optical modules, InP capacity has become a strategic bottleneck in the global optical communications supply chain. Through successive acquisitions, Nokia is rapidly building vertically integrated in-house InP capabilities spanning wafer manufacturing through packaging and testing. The company aims to reduce its dependence on external suppliers and secure control over capacity for critical optical communications components.

From an industry trend perspective, traditional telecommunications equipment giants are accelerating their expansion upstream into semiconductor manufacturing. Nokia’s decision to build out InP capacity in Arizona allows it to leverage the mature infrastructure of NXP’s existing fab for rapid conversion, while also aligning with U.S. policy efforts to promote domestic semiconductor manufacturing. For China’s domestic optical communications industry, Nokia’s vertical integration in InP further raises the competitive barriers in the global high-end photonic chip market. Chinese companies still need to accelerate technological breakthroughs and capacity expansion in areas including InP substrates, epitaxy, and photonic chip manufacturing to ensure that they are not constrained by external supply bottlenecks during the AI-driven surge in optical interconnect demand.

04

Company Updates（August.7）

Nanya Technology Launches Long-Term Investment Plan for Fab 5A, Committing TWD 346.6bn to Advanced 10nm-Class Processes

On August 5, Nanya Technology announced the launch of a long-term investment plan for its Fab 5A. The company’s board approved an increase in this year’s capital expenditure from the originally planned TWD 52bn to TWD 69.7bn, representing an increase of approximately 34%. The additional spending will mainly be used to accelerate construction of Fab 5A and make advance payments for certain equipment. Under the plan, Nanya Technology’s capital expenditure budget from 2026 to 2029 will be capped at TWD 346.6bn. The new fab will introduce advanced 10nm-class process technologies including 1B, 1C, 1D, and 1E, as well as EUV lithography equipment. Fab 5A is designed for maximum monthly capacity of approximately 45,000 wafers. Total investment is estimated at around USD 16bn, with construction and capacity expansion to be carried out in phases based on market demand. In terms of capacity planning, the new fab is expected to begin wafer starts in the second half of 2027, reach monthly wafer starts of 30,000 wafers in 2028, and further increase to 35,900 wafers per month in 2029. Capacity will subsequently be expanded toward the full planned level depending on market demand.

Commentary: Nanya Technology’s TWD 346.6bn long-term investment plan represents the largest single-fab expansion project in the DRAM industry in China’s Taiwan region in recent years. As the world’s fourth-largest DRAM supplier, behind only Samsung, SK Hynix, and Micron, Nanya Technology has long focused on consumer and niche DRAM markets. With the three industry leaders shifting more capacity toward high-margin products such as HBM, Nanya Technology has gained a strategic window for differentiated competition. The Fab 5A project will directly introduce EUV lithography equipment and advanced 10nm-class processes from 1B through 1E, indicating that Nanya Technology is seeking to narrow the technology-generation gap with leading DRAM manufacturers.

From a capacity ramp-up perspective, the phased plan to begin wafer starts in the second half of 2027, reach 30,000 wafers per month in 2028, and 35,900 wafers per month in 2029 reflects a measured assessment of market demand. The company is avoiding overly aggressive expansion while retaining flexibility for further capacity additions. The total investment of USD 16bn represents a major financial commitment for Nanya Technology and reflects management’s confidence in sustained long-term DRAM demand growth, particularly for server DRAM driven by AI. For the global DRAM supply-demand landscape, Nanya Technology’s expansion will gradually bring incremental capacity online from 2028 onward. It is unlikely to change the tight supply situation in the near term, but over the longer term it will provide the market with an additional source of supply. For China’s domestic memory industry, Nanya Technology’s investment in 10nm-class processes and EUV technology further raises the competitive barriers in the DRAM market, requiring domestic DRAM manufacturers to accelerate their technological catch-up.

05

Company Updates（August.4）

BASiC Semiconductor and Episil Technologies Form Strategic Partnership to Accelerate Development and Mass Production of 8-Inch SiC Wafers

On August 4, Shenzhen BASiC Semiconductor Co., Ltd. issued a voluntary announcement stating that it has entered into a strategic partnership with Episil Technologies Inc. Building on their long-standing cooperation, the two companies will accelerate the development and mass production of 8-inch silicon carbide (SiC) wafers. The partnership will combine BASiC Semiconductor’s advanced product technologies and market strengths with Episil Technologies’ high-quality, large-scale wafer manufacturing capabilities to jointly develop new process platforms and bring them into mass production, thereby increasing the market share of SiC products in applications including new energy vehicles and AI compute centers. In addition, the two companies will conduct joint research on core processes and application technologies for emerging compound semiconductors in cutting-edge applications.

06

Company Updates（August.6）

Hwatsing Technology Rolls Out First 6-Inch Integrated Metrology Equipment, Further Enhancing Closed-Loop Control for CMP Processes

On August 6, Hwatsing Technology Co., Ltd. officially rolled out its 6-inch integrated metrology equipment, which will be delivered to a leading domestic optical silicon materials company. The equipment can be directly integrated into the full CMP (chemical mechanical polishing) process flow, enabling real-time measurements before and after polishing while simultaneously uploading data to the production control system. Equipped with an SAPC intelligent process control system, it dynamically adjusts polishing time and zonal polishing pressure through closed-loop feedback, significantly improving both within-wafer and wafer-to-wafer uniformity. The entire metrology process requires no offline wafer transfer and can be deeply integrated with the equipment’s native endpoint detection system. This enables real-time compensation for process drift and process fluctuations, improves wafer-to-wafer and lot-to-lot consistency, reduces rework and wafer scrap, and ultimately enhances overall equipment utilization and production yield.

07

Company Updates（August.7）

AMEC Establishes Central China Headquarters in Wuhan Optics Valley, Focusing on R&D of Core Semiconductor Equipment
According to the Hubei Provincial Department of Economy and Information Technology, Advanced Micro-Fabrication Equipment Inc. (AMEC) has officially established its Central China headquarters in Wuhan Optics Valley, focusing on the R&D of core semiconductor equipment. The company completed the registration of its Wuhan subsidiary on July 28, settling in the Optics Valley Storage and Computing Innovation Park, with operations expected to begin in early 2027. AMEC Wuhan Co., Ltd., with a registered capital of RMB 50 million, will establish a headquarters and R&D center in the park to develop thin-film deposition, etching, epitaxy, and other core semiconductor equipment, serving key clients in Wuhan and the broader Central China region. The site is expected to employ approximately 300 people, including 100 R&D personnel. Founded in 2004 and listed on the STAR Market, AMEC is a leading domestic semiconductor equipment manufacturer, having developed 54 types of high-end semiconductor tools, including 26 high-energy and low-energy.