(Yicai) June 17 -- Source Photonics, a subsidiary of Chinese electronics manufacturer Dongshan Precision Manufacturing, plans to invest USD1.2 billion to increase its production capacity of optical chips and modules.

Source Photonics will raise the capacity of its manufacturing bases, including that in China’s Changzhou, to meet the surging demand driven by the rapid expansion of the artificial intelligence computing industry, Dongshan Precision said in a statement yesterday. No details were disclosed about the product categories and volume.

Source Photonics has a factory in Hsinchu in China’s Taiwan, which focuses on optical chip wafers and other upstream industrial chain products, one in Changzhou that mainly produces mid-stream items, including optical chips and components, and one in Chengdu, which specializes in downstream optical modules. Its new Thai plant has not yet achieved mass production.

This capacity expansion plan will scale up the company’s output of high-end optical chips and optical modules, fully address medium- and long-term procurement needs from downstream AI server customers, and lift the group’s overall economic benefits, Dongshan Precision noted.

Shares of Dongshan Precision [SHE: 002384] were trading up 2.5 percent at CNY255.20 (USD37.76) apiece as of 2.35 p.m. in Shenzhen today, after earlier gaining as much as 6.8 percent.

Dongshan Precision, whose core businesses initially covered printed circuit boards, optoelectronic display products, and precision components, completed the acquisition of Source Photonics last September. Since then, Dongshan Precision’s stock has climbed about 260 percent.

Buying Source Photonics will enable Dongshan Precision to quickly enter the optical communications market while delivering synergies between the two companies in customer resources, manufacturing expertise, and supply chain management capabilities, Dongshan Precision said back then.

Source Photonics generated 16 percent of Dongshan Precision’s operating revenue and 53 percent of its net profit in the first quarter, the parent company noted yesterday.

Editor: Futura Costaglione