Even If the Optical Module Supplier's Nationality Changes, Doosan's CCL Remains the Same

[Financial News]  The possibility of export controls on Chinese-made optical modules has emerged as a short-term variable for Doosan's stock price. However, securities analysts say the actual impact on Doosan Electro-Materials BG's results will be limited. Even if shipments from Chinese optical module manufacturers decline, the volume will simply shift to non-Chinese companies, while demand for Doosan's copper-clad laminate (CCL) used in optical modules is likely to remain intact.
According to Meritz Securities on the 2nd, recent weakness in Doosan's stock price reflected concerns that Chinese companies account for a large share of optical module-related sales at Doosan Electro-Materials BG based on end customers. Similar stock price movements have appeared whenever the possibility of regulations on Chinese-made optical modules has gained prominence, following a similar episode in August.
However, the picture changes when the optical module supply chain is examined closely. Even if non-Chinese companies take over optical module volumes previously handled by Chinese companies, Doosan Electro-Materials BG products are used for a substantial portion of the CCL applied to those modules. In other words, the manufacturer of the optical modules may change, but the key materials supplier can remain the same.
Financial results also support this view. Doosan Electro-Materials BG's CCL revenue from optical modules increased from KRW 34.4 billion in the first quarter to KRW 49.3 billion in the second quarter of this year. Meritz Securities estimated that related revenue would reach KRW 105.9 billion in the third quarter, more than doubling from the previous quarter.
The key issue going forward is the advancement of optical communications at global data centers, rather than Chinese regulations. Optical module shipments are increasing as AI data centers expand. In addition, as the market transitions from 1.6T to next-generation 3.2T optical modules, adoption of high-spec CCL is likely to expand.
With the effects of capacity expansion added to the equation, analysts say the growth engine of Doosan Electro-Materials BG is rapidly shifting from conventional electronic materials to high-value-added CCL for AI data centers.
Yang Seungsoo, a researcher at Meritz Securities, said, "Even if the final optical module supplier changes, we expect no significant change in the overall volume of CCL supplied by Electro-Materials BG," adding, "Contrary to concerns over regulations on Chinese-made optical modules, the medium- to long-term growth outlook for optical module-related CCL remains unchanged."


[email protected] Kim Kyung-a Reporter