Guosen Securities released a research report stating that OCS technology is still in the early stages of industrialization. As adoption rates by Google increase, alongside customer and scenario penetration, demand for related OCS components and materials—such as collimators, YVO4 lenses, and optical lenses—is rising. Domestic component manufacturers, particularly those with deep collaborations with leading international companies, are poised to benefit from development in this sector. The report recommends focusing on companies within the OCS industry chain, including Zhongji Innolight (300308.SZ) and Accelink (002281.SZ).
Key viewpoints from Guosen Securities are as follows: Optical Circuit Switch (OCS) is a technology that enables direct switching of optical signals between fiber optic ports without requiring optical-to-electrical or electrical-to-optical (O/E/O) conversion. It is applied in scenarios such as AI computing clusters, spine-leaf architecture interconnects in hyperscale data centers, and high-speed communication within super-node clusters. By performing data signal routing and switching directly in the optical domain, OCS technology fundamentally avoids the bandwidth bottlenecks and power consumption issues associated with traditional electrical switching at high transmission speeds. It significantly reduces signal transmission latency, and its power consumption is related only to the number of ports, not the signal transmission rate, thereby substantially lowering overall power usage. Industry research and practical implementation have verified that OCS technology can help reduce the total power consumption of AI computing clusters and data center optical interconnection systems by over 30%.
Currently, there are four main technical approaches to OCS, each involving trade-offs in cost, performance, and technical difficulty. The primary routes are MEMS, liquid crystal, piezoelectric, and silicon waveguide. Among these, the MEMS approach, used in Google’s in-house solution, has the fastest commercial adoption pace, followed by liquid crystal-based solutions. As Google shifts from a "self-developed + OEM" model toward procuring integrated OCS solutions, it is opening up a larger market space for OCS technology.
With continuous upgrades in SerDes rates, OCS technology is expected to see rapid adoption among customers beyond Google in the future. According to Cignal AI estimates, the OCS market in 2025 will be dominated by Google’s MEMS-based OCS, with a total market size of approximately $400 million. By 2029, the OCS market size is projected to exceed $2.5 billion, representing a compound annual growth rate (CAGR) of about 58% over four years. This high growth is primarily driven by increasing computational demands in Google’s AI data centers, along with expanded customer penetration and application scenarios. Lumentum’s Q4 2025 earnings report disclosed that its OCS order backlog has surpassed $400 million, mainly from three core customers, with demand continuing to rise significantly. The company expects Q4 2026 revenue to exceed $100 million.
Risk warnings include slower-than-expected AI development and investment, delays in OCS advancement, intensifying industry competition, global geopolitical risks, and supply chain shifts caused by new technological developments.