In early 2026, global commodity markets experienced increased volatility: gold prices broke through $5,189 per ounce, and prices of non-ferrous metals such as copper and tin rose by more than 20% year-on-year. Prices of epoxy resin and fiberglass, key raw materials for PCB boards, also continued their upward trend. For the optical module industry, these raw materials form the "basic framework" of product manufacturing— critical components such as metal pins, cable connectors, and gold fingers on PCB boards all rely on precious and non-ferrous metals. Rising raw material prices are being passed on from the cost side to business operations, and optical module manufacturers are facing the dual challenges of squeezed profits and supply chain management.

I. Optical Modules "Metal Dependence": The Cost Proportion of Raw Materials in the Product

Although optical modules are high-tech products, raw material costs account for as much as 60%-70% of the total cost, with metal materials being one of the major cost items.

(1). Gold fingers and connectors: The gold fingers (gold-plated contact points on the PCB board) of the optical module must use a high-purity gold plating layer to ensure the stability and corrosion resistance of signal transmission.

(2). PCB boards and cables: The metal pins of PCB boards, the copper cores of conductive cables, and the copper alloy shells of connectors all rely on non-ferrous metals such as copper and tin.

(3). Auxiliary materials: Tin solder, metal heat sinks, etc. also require the consumption of metals such as tin and aluminum, further increasing the proportion of raw material costs.

Taking the 100G SFP28 module, the current mainstream product in optical communication, as an example, when the price of gold rises by 10% and the price of copper rises by 20%, the metal cost of a single module will increase by about 8-10 yuan. For a 100G module production line with a monthly output of 10,000 units, the monthly cost will increase by several hundred thousand yuan.

II. Direct Impact of the Price Hike Wave: Profit Compression and Order Negotiation Pressure

For manufacturers primarily focused on mid-to-high-end optical modules, the impact of rising raw material prices is mainly reflected in two dimensions:

1. Narrowing Profit Margins

The optical module industry is currently highly competitive. The gross profit margin of low- and medium-speed products such as 10G and 25G has been compressed to 15%-20%, while the gross profit margin of high-speed products such as 100G and 400G is about 25%-40 % . If the price of metal raw materials continues to rise and cannot be fully passed on to downstream industries, corporate profits will be further pressured.

2. Insufficient Order Negotiation Power

The company primarily serves small and medium-sized cloud vendors and regional telecom operators. These customers are highly price-sensitive, and some long-term orders have locked-in prices that are difficult to adjust in the short term. For example, the company's annual order for 25G modules with a Southeast Asian telecom operator has been locked in until mid-2026, while copper and tin prices have risen by more than 15% since the end of 2025, causing the actual profit margin of this order to decline more than expected.

III. Optical Module Countermeasures: From Cost Control to Supply Chain Optimization

Faced with rising raw material prices, companies in the industry are mitigating the impact through a three-dimensional strategy of "cost reduction, substitution, and price locking":

1. Process Optimization to Reduce Consumption

Without compromising product performance, signal transmission stability can be ensured through process improvements and optimization of PCB layout.

2. Material Substitution and Domestic Production

Increase the proportion of domestically produced PCB boards and metal components. Previously, high-end PCB boards mainly relied on imports. After domestic substitution, not only will procurement costs be reduced, but the flexible production of domestic suppliers can also quickly adjust material specifications to meet the needs of process optimization.

3. Long-term Contract Price Locking and Inventory Adjustment

For key metal raw materials, sign long-term procurement agreements of 3-6 months with upstream suppliers to lock in some raw material prices and reduce the impact of short-term fluctuations; at the same time, flexibly adjust inventory according to price trends and appropriately increase stockpiles when metal prices fall in stages.

IV. Long-Term Strategy Amid Industry Trends: Offsetting Cost Pressures Through Technological Upgrades

The essence of rising raw material prices is systemic pressure on industry costs. In the long run, technological upgrades are an important way to offset these costs. We are accelerating the development of two technologies:

1. Silicon Photonics Technology Reduces Costs

Silicon photonics modules use silicon-based materials to replace the III-V compound materials in traditional optical chips, while also reducing the amount of metal components used—the amount of gold fingers and copper used in silicon photonics modules is reduced accordingly , making the overall raw material cost relatively controllable .

By using modular product design, the company standardizes metal parts of the same specifications, thereby increasing procurement volume and production efficiency . For example, by standardizing the connector specifications for 100G and 400G modules, the company increases the procurement volume of metal parts, thereby obtaining bulk discounts from upstream suppliers and reasonably controlling procurement costs.

V. Conclusion: Resilience and Opportunities Amidst Price Hikes

Rising raw material prices are a microcosm of the cyclical fluctuations in the optical module industry. For the industry , short-term cost pressures are both a challenge and an opportunity to optimize the supply chain and promote technological upgrades. Through process improvements, material substitution, and long-term price locking, the impact of price increases has been initially mitigated; while the deployment of silicon photonics technology and modular integration lays the foundation for long-term cost reduction and enhanced competitiveness.

Against the backdrop of continued growth in global demand for optical modules, companies with strong cost control capabilities and rapid technological iteration will be better able to withstand market fluctuations. Practice also shows that small and medium-sized manufacturers do not need to compromise excessively in price wars; through refined management and technological upgrades, they can also maintain resilience and achieve sustainable development throughout industry cycles.