On the evening of June 16, Suzhou Dongshan Precision Manufacturing Co., Ltd. ("Dongshan Precision") announced in a regulatory filing that its board has approved the Proposal on Overseas Investment, greenlighting its subsidiary Source Photonics Holdings (Cayman) Limited ("Source Photonics") and its subordinate entities to roll out an optical chip and optical module expansion project in Changzhou and other locations across China.
With a total investment of 1.2 billion U.S. dollars — fully self-funded by the enterprise — the project is designed to scale up Source Photonics’ overall production capacity and align with long-term procurement demand from the broader industry and downstream customers.
A long-established player in optical chip and module R&D and manufacturing, Source Photonics holds full-stack core technologies and mature production processes spanning optical chip design, fabrication, packaging, as well as optical module assembly and performance testing. Its core team boasts deep expertise in R&D and mass production of optical communication products, enabling end-to-end delivery of technology iteration, process optimization and large-scale manufacturing — laying a solid technical foundation for the capacity buildout.
Source Photonics was consolidated into Dongshan Precision’s financial statements in October 2025, and its operations remain stable and orderly at present. In 2025 and the first quarter of 2026, the subsidiary contributed 3.58% and 16.02% of Dongshan Precision’s consolidated operating revenue respectively, and accounted for 22.69% and 52.92% of its consolidated net profit, establishing itself as a core profit growth driver for the parent firm.
Dongshan Precision stated that optical chips and modules are core foundational components of the AI computing power industry, and Source Photonics’ existing capacity is no longer sufficient to keep pace with industry expansion and surging order volumes from downstream clients. The expansion will effectively close the supply gap, secure medium- and long-term large-scale supply for customers, continuously optimize the product portfolio, and further elevate the company’s overall profitability and market standing.
In an interview with Securities Daily, Zhang Xiaorong, Dean of the Deep Technology Research Institute, noted that global AI computing infrastructure construction is accelerating rapidly, driving sustained demand for high-speed optical chips and modules, while the wider industry faces a supply shortfall.
Backed by Source Photonics, Dongshan Precision has built a vertically integrated footprint across optical chips and modules. Combined with this $1.2 billion large-scale capacity expansion, the company will further cement its competitive edge in the computing power optical communications space, advance the synergistic development of its dual core businesses — PCB and optical communications — and fully capture the long-term growth upside of the AI industry, Zhang added.
This outbound investment does not involve related party transactions, nor does it meet the threshold for material asset restructuring under the Administrative Measures for Material Asset Restructuring of Listed Companies. As such, it is not subject to approval by the shareholders’ general meeting.
Dongshan Precision also flagged a range of operational and project risks. The company’s day-to-day operations are subject to multiple variables including macroeconomic conditions, industrial policies, downstream market demand and internal management, which create uncertainties for the future performance of both Source Photonics and the listed company as a whole.
Meanwhile, the rollout of the expansion project requires completion of multiple pre-approval procedures, including project approval, official filing, environmental impact assessment (EIA) and energy conservation assessment. Should there be policy adjustments, slower-than-expected approval progress, or industry cyclical fluctuations, the project may face revised implementation plans, construction delays, mid-phase suspension or even termination, the company warned. It added that it will proactively coordinate with local governments and regulatory authorities to push forward all approval processes.
Lin Xianping, Executive Deputy Secretary-General of the China Urban Experts Think Tank Committee, told Securities Daily: "From an industry competition perspective, this capacity expansion will significantly boost Dongshan Precision’s mass supply capacity and market share, and strengthen its influence across the sector. From a long-term industrial development standpoint, the project aligns with the secular growth trend of the computing power industry, and is expected to continuously deliver growth dividends and solidify the company’s medium- and long-term development foundation."
In secondary market trading on June 16, shares of Dongshan Precision closed at 249.06 yuan apiece, up 4.07%, bringing its total market capitalization to 456.2 billion yuan.