[Click eStock] "OE Solution, Korea's Top-Tier Optical Transceiver...Entering the Data Center Market"

On December 11, Hanyang Securities analyzed that OE Solution is moving away from a wireless-centric business structure and shifting toward a focus on data centers and wired/transmission networks, entering a new phase of growth.

OE Solution, which develops, manufactures, and sells optical transceivers in-house, is a leading domestic transceiver specialist with a vertically integrated structure, performing all processes at its headquarters in Gwangju. Its clients include global telecommunications equipment companies such as Samsung Electronics’ Network Division, Nokia, Ericsson, Cisco, and Ciena. The company’s product lineup covers transceivers for wireless, wired, transmission networks, and data centers.

Lee Junseok, a researcher at Hanyang Securities, explained, “OE Solution is currently in a transition phase where the proportion of wired, transmission network, and Datacom businesses is expanding beyond its previous wireless-centric structure.” In fact, during the initial 5G investment period, wireless accounted for more than 90% of sales, but as of the cumulative third quarter of this year, wireless made up 46%, telecom 22%, and FTTH/MSO 26%, raising the wired segment’s share to 48%. The key driver of this structural change is Sumitomo in Japan deciding to halt in-house production of FTTH transceivers for NTT and transferring those orders to OE Solution.

Even though only one-third of the expected total volume has been reflected so far, the company has already generated 6.3 billion KRW in cumulative sales for this item in the third quarter, making its contribution to earnings visible. Lee noted, “If the entire volume is transferred in the future, sales from this item could more than double next year. Additionally, the anticipated resumption of pre-investment in 5G Advanced and 6G after 2026 leaves room for a rebound in the wireless segment.”

The company has also officially entered the data center transceiver business. Lee explained, “With the global expansion of AI data centers, demand for high-speed optical transceivers is structurally increasing. OE Solution has already begun mass production of 100G-class products, while 200G and 400G-class products are currently undergoing sampling and qualification tests with global clients.”

Another growth driver is the laser chip segment. Laser chips are a core component, accounting for about 30% of the transceiver’s cost, and the company has been making proactive investments since 2019. Lee emphasized, “Since last year, external sales to China have begun to show results, and Datacom and laser chips are expected to be key growth drivers that will not only turn around the company’s performance but also lead to a structurally high-profit business model.”

This content was produced with the assistance of AI translation services.