Mirae Asset Securities has released a report forecasting strong earnings for Sungho Electronics (043260), which acquired optical transceiver equipment manufacturer ADS Tech.
ADS Tech produces equipment essential for manufacturing optical transceivers that transmit data between servers in artificial intelligence data centers. The company supplies this equipment to Mellanox, a subsidiary of Nvidia.
ADS Tech possesses Co-Packaged Optics (CPO) technology, which integrates semiconductor chips and optical components such as lasers and photodetectors onto a single package substrate. Nvidia highlighted this technology as a core element of next-generation networking solutions at its GTC 2025 conference last year, raising the company's global profile. Sungho Electronics' stock price has surged since acquiring ADS Tech as a subsidiary.
In its recent report, Mirae Asset Securities projected ADS Tech's revenue for this year at 90.3 billion won with operating profit of 43.3 billion won. This represents year-over-year increases of 64% in revenue and 70% in operating profit.
Sungho Electronics holds ADS Tech through Amazing Holdings, its wholly-owned subsidiary. The company announced in December last year that it would acquire an 87.5% stake in ADS Tech for approximately 280 billion won and completed the transaction last month.
Founded in 2000, ADS Tech specializes in optical transceiver alignment equipment and supplies optical transceiver equipment to Mellanox based on its CPO technology.
CPO technology integrates core semiconductor chips responsible for data processing with optical components that transmit data using light processing technology onto a single package substrate. The technology began attracting significant market attention after Nvidia designated it as a core element of next-generation networking solutions at GTC 2025.
Mirae Asset Securities expects global adoption of CPO technology to accelerate. The firm forecasts growing demand centered on hyperscale AI data centers that require massive amounts of power, as CPO offers significantly higher power efficiency than existing technologies.
The partnership between ADS Tech and Nvidia is facilitating the spread of this new technology. ADS Tech has collaborated with Mellanox since 2015. Since Nvidia acquired Mellanox in 2020, ADS Tech has strengthened its partnership by jointly developing next-generation networking technology with Nvidia headquarters.
At CES 2026 this year, Nvidia made CPO-related announcements and indicated the third quarter of this year as the commercialization milestone.
"The CPO market will enter a full-scale mass production growth phase starting in 2027," said Park Jun-seo, a researcher at Mirae Asset Securities. "As Nvidia and Broadcom's CPO mass production roadmaps become reality, the technology verification stage has already passed."
