A not-yet-effective FCC draft rule repriced the optical supply chain in a week: Innolight plunged, Coherent soared over 40%. But the real bottleneck isn't module assembly; it's upstream EML and InP. The policy arbitrage is real, the capacity shift is slower.

The FCC wants to move optical module orders away from China, but the Western vendors taking those orders still grow their laser dies on substrates China approves for export. 6-inch InP is up 250% with a supply gap above 70% — de-Sinicization works at the module layer, but has no answer at the materials layer yet. This week's three earnings calls and OCP's CPO move point the same way: the decisive move has shifted down to indium phosphide.