Source: Content compiled from Economic Daily

In response to the surge in demand for AI, Marvell, a leading US network communications and optical communications company, recently sent a letter to its customers notifying them that prices of its entire product line will increase starting January 1, 2018, firing the first shot in the price increase for optical communications. Among Taiwanese companies, WT Microelectronics is Marvell's largest agent partner and will benefit first. Optical communications companies such as China Star Optoelectronics, Qian Ding, Guang Sheng, and Guang Huan will also benefit from the price increase.

01 About Marvell

Marvell's operations benefit from the surge in demand for ASIC (application-specific IC), silicon photonics and other cloud data center-related AI. Last quarter's financial report and forecast amazed the market. The announcement of price increases this time was interpreted by the industry as a reflection of the frenzy of market demand in addition to continued investment in cutting-edge and innovative product development to seize business opportunities.

The industry leaked a price increase notice signed by Dean Jarnac, Marvell's senior vice president of global sales. The letter mentioned that with the surge in global demand for accelerated computing and AI, the entire semiconductor supply chain is making unprecedented investments to build diversified production bases and expand production capacity. Marvell is no exception. Therefore, it will continue to innovate and increase investment to provide customers with cutting-edge products and technologies.

Dean Jarnac said that in response to the increase in investment, all products will be increased in price from January next year, and the price increase will be minimized as much as possible to avoid too much impact on customers. He also told customers in the letter that customers must place orders according to the delivery date and provide accurate demand forecasts.

Marvell delivered a brilliant financial report and financial forecast last quarter, mainly benefiting from the surge in AI demand, which led to strong growth in data center business, which was much better than market expectations. Among them, optical communication products such as 800G PAM and 400ZR data center interconnect (DCI) played an important growth engine, driving data center revenue to increase by more than 90% year-on-year.

Marvell CEO Matt Murphy also revealed at the time that the data center business will continue to accelerate growth, and the two major businesses of enterprise network and telecommunications terminal market will also return to the growth track, and operational recovery can be expected.

02 Industry insiders are optimistic

Industry insiders are optimistic that Marvell has opened the first shot of price increase in the industry, which also reflects how "crazy" the market demand is, echoing NVIDIA CEO Huang Renxun's previous statement that "market demand is very crazy", and at the same time triggering greater imagination for potential business opportunities in the optical communication industry chain.

Among Taiwanese manufacturers, channel giant WT Microelectronics is Marvell's largest agent partner. Driven by the benefits of cross-border mergers and acquisitions, WT Microelectronics' consolidated revenue in the third quarter reached 261.3 billion yuan, a record high for a single quarter, a quarterly increase of about 7% and an annual increase of 56%.

WT Microelectronics' consolidated revenue in the first nine months was about 697.6 billion yuan, a year-on-year increase of 72%, an outstanding performance. As Marvell will increase prices, WT Microelectronics will benefit simultaneously.

In addition, Marvell is a major customer of optical communication manufacturer CSOT, and the price increase effect will also boost optical communication groups such as CSOT. CSOT actively follows Marvell's footsteps and continues to invest in the research and development of 800G optical transceiver modules and co-packaged optical components (CPO), with a leading technological advantage. Due to the close cooperation between CSOT and Marvell, Marvell's orders are booming, and CSOT is in the "first row of sea views", and its operations will also benefit first.

Since the beginning of this year, Guangsheng has also received a lot of orders from American data center customers. After the cumulative revenue in the first half of the year increased by more than 60% year-on-year, with the monthly revenue increasing steadily, the cumulative revenue in the first three quarters has nearly doubled compared with 2023, and the revenue scale has increased at an astonishing rate.