thanks for the post (and for starting the optics stock boom). the optics space is big and not well known yet - which areas of the supply chain and companies should we watch especially closely?
also was wondering your thoughts on CPOs? Credo said on its earnings call yesterday that it doesn't see CPO being used much in the near term because of still unsolved reliability issues. But he's biased of course so wanted your expert neutral view.
Its important to see the general signals overall imo:
* Lumentum stock rises due to laser sources
* Credo acquires Hyperlume for microLEDs
* Marvell supposedly looking at Celestial for EAMs
* LITE and COHR apparently have OCS switches in TPUs
A flurry of recent activity like this impacts all component makers up and down the supply chain. It's a matter of then finding who is supplying to who. I don't have all the info here, but will be looking at it from this lens.
I also saw the CPO mention in the earnings call, and smelled a rat there. When people talk about CPO, they say that laser sources fail due to heat from asic etc... but the industry has solved this with external lasers in ELSFP connectors. I have a whole post on this.
When CPO becomes mainstream, external UHP lasers with 400 mW+ of output will be key. Broadcom has shown that CPO reliability is very good with data that shows it to be much much better than pluggables. Its good for CRDO business to say CPO is problematic though.
I would like to push back a little against your statement:
"To be clear, this is a Lumentum-specific 'problem' of being sold out on the EML laser front, and not a industry-wide phenomenon like memory shortage"
Coherent Corp had also mentioned a major shortage of InP lasers in their latest Earnings Call:
"In our data center business, Q1 revenue grew 4% sequentially and 23% year over year. Our data center growth in Q1 was constrained by the supply of indium phosphide lasers."
"On the supply side, given the strong demand growth we are seeing, we are continuing to expand our production capacity for transceiver modules and the key optical components used in those modules. For example, one of the key constraints across the industry is indium phosphide laser capacity."
That's all to say-- I have no idea the supply constraint (or lack there of?) for a company like InnoLight in China. I could be missing the larger point that this is a regional, or temporary, shortage given that all companies are committed to ramping up more manufacturing, unlike the Memory Sector:
"Over the course of Q1, we saw improving EML supply, and we expect both internal and external EML supply to improve significantly in the current quarter and throughout the balance of this fiscal year. In particular, we continue to expand our internal indium phosphide production capacity. We are aggressively ramping six-inch capacity because a six-inch wafer compared to a three-inch wafer will produce more than four times as many chips at less than half the cost. I am very pleased to share that our initial six-inch indium production yields are actually higher than our current three-inch indium phosphide yields." Coherent Corp. CEO Jim Anderson said.
Very interested to see how this all plays out!
Thanks again for all you do, I really enjoy the thoughtful content you provide.
Glad to hear your pushback... other perspectives are always welcome.
The small wafer diameter is a problem for sure in InP -- and 6" wafers will produce more quantity per wafer... if the claim that their yields are actually better than 3" wafers are true.
I personally don't understand the physics of InP and what exactly affects yields... but it is an interesting area to look into.
thanks for the post (and for starting the optics stock boom). the optics space is big and not well known yet - which areas of the supply chain and companies should we watch especially closely?
also was wondering your thoughts on CPOs? Credo said on its earnings call yesterday that it doesn't see CPO being used much in the near term because of still unsolved reliability issues. But he's biased of course so wanted your expert neutral view.
Its important to see the general signals overall imo:
* Lumentum stock rises due to laser sources
* Credo acquires Hyperlume for microLEDs
* Marvell supposedly looking at Celestial for EAMs
* LITE and COHR apparently have OCS switches in TPUs
A flurry of recent activity like this impacts all component makers up and down the supply chain. It's a matter of then finding who is supplying to who. I don't have all the info here, but will be looking at it from this lens.
I also saw the CPO mention in the earnings call, and smelled a rat there. When people talk about CPO, they say that laser sources fail due to heat from asic etc... but the industry has solved this with external lasers in ELSFP connectors. I have a whole post on this.
https://www.viksnewsletter.com/p/why-cpo-uses-external-lasers?r=222kot
When CPO becomes mainstream, external UHP lasers with 400 mW+ of output will be key. Broadcom has shown that CPO reliability is very good with data that shows it to be much much better than pluggables. Its good for CRDO business to say CPO is problematic though.
thanks! re-reading your nov 10 post now
Great read Vik, thanks for sharing your insight!
I would like to push back a little against your statement:
"To be clear, this is a Lumentum-specific 'problem' of being sold out on the EML laser front, and not a industry-wide phenomenon like memory shortage"
Coherent Corp had also mentioned a major shortage of InP lasers in their latest Earnings Call:
"In our data center business, Q1 revenue grew 4% sequentially and 23% year over year. Our data center growth in Q1 was constrained by the supply of indium phosphide lasers."
"On the supply side, given the strong demand growth we are seeing, we are continuing to expand our production capacity for transceiver modules and the key optical components used in those modules. For example, one of the key constraints across the industry is indium phosphide laser capacity."
That's all to say-- I have no idea the supply constraint (or lack there of?) for a company like InnoLight in China. I could be missing the larger point that this is a regional, or temporary, shortage given that all companies are committed to ramping up more manufacturing, unlike the Memory Sector:
"Over the course of Q1, we saw improving EML supply, and we expect both internal and external EML supply to improve significantly in the current quarter and throughout the balance of this fiscal year. In particular, we continue to expand our internal indium phosphide production capacity. We are aggressively ramping six-inch capacity because a six-inch wafer compared to a three-inch wafer will produce more than four times as many chips at less than half the cost. I am very pleased to share that our initial six-inch indium production yields are actually higher than our current three-inch indium phosphide yields." Coherent Corp. CEO Jim Anderson said.
Very interested to see how this all plays out!
Thanks again for all you do, I really enjoy the thoughtful content you provide.
Glad to hear your pushback... other perspectives are always welcome.
The small wafer diameter is a problem for sure in InP -- and 6" wafers will produce more quantity per wafer... if the claim that their yields are actually better than 3" wafers are true.
I personally don't understand the physics of InP and what exactly affects yields... but it is an interesting area to look into.