US Optical Ban Debate: Morgan Stanley Sees Supply Gains, Citigroup Predicts Exemptions

Wall Street diverges on US optical module import restrictions. Morgan Stanley highlights supply chain benefits for US firms, while Citigroup warns of implementation hurdles and likely exemptions due to capacity constraints.

Woofun AI reports that US plans to restrict Chinese AI data center optical components are triggering market volatility, with US optical stocks surging while A-share counterparts face pressure. Morgan Stanley argues that non-Chinese suppliers like Coherent and AAOI could gain market share if the ban proceeds, though they acknowledge implementation challenges due to insufficient non-Chinese capacity and reliance on Chinese upstream materials.

Conversely, Citigroup maintains a cautious stance, noting that Chinese firms supply over 50% of high-speed modules and possess cost advantages, suggesting the policy will likely include exemptions. Citigroup ranks FiberHome Technologies as least affected due to its passive device focus, while Neophotonics faces direct impact despite overseas production buffers. The consensus indicates short-term valuation boosts for US suppliers, but long-term outcomes depend on order reallocation feasibility and third-country capacity coverage.