Guidance raised to $1.25 billion as Lumentum's 1.6T and OCS businesses accelerate
2026-08-11 23:16
Odaily News: Paradis Labs stated on the X platform that the key takeaways from Lumentum's earnings call are as follows.
1. EML.
Lumentum reported strong EML performance this quarter, driven primarily by 100G-per-channel products. Growth for 200G-per-channel products is "accelerating rapidly," now accounting for over 25% of total EML revenue. Lumentum still expects EML shipments in December 2026 to grow by more than 50% compared to December 2025, even as it shifts some production capacity to CW lasers during this period.
Lumentum has added sales of CW laser chips for 200G-per-channel applications to "numerous customers," moving beyond internal use only. The company is expanding two indium phosphide wafer fabs in Japan and is validating production processes for 200G and 300G-per-channel CW lasers and EMLs on its latest equipment.
Coherent will report earnings tomorrow, with its business also involving 200G-per-channel EMLs and 400-milliwatt CW lasers. The market is watching whether its 6-inch indium phosphide wafers can deliver a cost advantage, and whether Lumentum will need to respond by improving yields.
2. CPO and NPO.
Lumentum stated that the leading CPO customer's production plans "remain on track," with customer demand signals stronger than at the time of the last update. The company now expects laser shipments to begin ramping in the second half of next year, earlier than the customer's large-scale deployment scheduled for 2028.
Lumentum has received its first order for ELS modules, with delivery scheduled for the second half of 2027. Other customers are primarily prioritizing NPO as an interim solution. The company said NPO will "bring fully incremental business and significantly expand the total addressable optical market," with even its largest CPO customer evaluating NPO for certain new application scenarios.
AAOI expects to ramp ELSFP capacity to approximately 400,000 units per month by 2028. Sivers Semiconductors' external indium phosphide light sources are gradually being adopted for CPO and NPO applications. Lumentum, as the largest commercial laser manufacturer, has already procured products related to the ELS architecture, indicating the architecture has gained validation through real orders.
3. Cloud transceivers and 1.6T.
Lumentum's 800G business set a record and began volume shipments of 1.6T products as planned. The company said its visibility into future cloud transceiver demand is "clearer than ever before."
The 1.6T business will continue to strengthen from the first fiscal quarter through 2027, driven primarily by hyperscalers' custom AI clusters accelerating the transition from 800G to 1.6T. Lumentum stated that in many cases, it achieved product launch earlier than its larger competitors, and it expects this market share advantage to persist throughout the cycle.
Transceiver business profitability is improving, driven by better yields, higher capacity utilization, and an increasing mix of 1.6T products. Lumentum holds a first-mover advantage in 1.6T products, while AAOI is becoming a fourth qualified 1.6T supplier for a major hyperscaler. AAOI has secured over $200 million in confirmed 1.6T orders, with certification expected to be completed within "two to three weeks." As all suppliers face capacity constraints, hyperscalers are actively diversifying across multiple vendors.
4. OCS.
Lumentum's OCS business went directly to quarterly revenue guidance of over $100 million. After successfully managing supply chain constraints and meeting strong customer demand, OCS shipments doubled from Q3 to Q4.
The company's Q1 guidance includes the first quarter with OCS revenue in the triple digits, and it indicated that demand signals for 2027 "remain very strong." Lumentum has added contract manufacturer capacity beyond its internal facilities and has expanded its product roadmap to include both higher and lower port count products, including dedicated entry-level offerings.
5. Guidance.
Lumentum raised its revenue guidance to $1.25 billion, representing 130% year-over-year growth. The CEO stated that adding nearly $250 million to the guidance increment is "quite substantial," with further room for increases in future quarters.
Approximately half of the incremental growth quarter-over-quarter comes from the components business, primarily driven by scale expansion and cross-scale expansion; the other half comes from the systems business, primarily driven by 1.6T and accelerating OCS. Paradis Labs noted that this relatively balanced structure between components and systems makes Lumentum's business more sustainable, with financial performance not dependent on a single product line.
6. Additional information.
Lumentum did not provide updates on the Greensboro project during this earnings call or in the report. The indium phosphide wafer fab timeline was originally a key point of focus, but given the company's repeated mentions of capacity at its two Japanese fabs, questions remain. AXT has reserved capacity through 2031, indicating recent momentum in substrate demand growth.
The FCC's ban on Chinese transceiver products remains a net positive for Lumentum's pursuit of 1.6T market share, but management did not comment on this, and analysts did not raise related questions during the call.
Paradis Labs noted that both Lumentum and AAOI are approaching important inflection points for laser business ramp-up, with ELS, NPO, and CPO set to layer on top of the already accelerating 1.6T and OCS systems businesses.
1. EML.
Lumentum reported strong EML performance this quarter, driven primarily by 100G-per-channel products. Growth for 200G-per-channel products is "accelerating rapidly," now accounting for over 25% of total EML revenue. Lumentum still expects EML shipments in December 2026 to grow by more than 50% compared to December 2025, even as it shifts some production capacity to CW lasers during this period.
Lumentum has added sales of CW laser chips for 200G-per-channel applications to "numerous customers," moving beyond internal use only. The company is expanding two indium phosphide wafer fabs in Japan and is validating production processes for 200G and 300G-per-channel CW lasers and EMLs on its latest equipment.
Coherent will report earnings tomorrow, with its business also involving 200G-per-channel EMLs and 400-milliwatt CW lasers. The market is watching whether its 6-inch indium phosphide wafers can deliver a cost advantage, and whether Lumentum will need to respond by improving yields.
2. CPO and NPO.
Lumentum stated that the leading CPO customer's production plans "remain on track," with customer demand signals stronger than at the time of the last update. The company now expects laser shipments to begin ramping in the second half of next year, earlier than the customer's large-scale deployment scheduled for 2028.
Lumentum has received its first order for ELS modules, with delivery scheduled for the second half of 2027. Other customers are primarily prioritizing NPO as an interim solution. The company said NPO will "bring fully incremental business and significantly expand the total addressable optical market," with even its largest CPO customer evaluating NPO for certain new application scenarios.
AAOI expects to ramp ELSFP capacity to approximately 400,000 units per month by 2028. Sivers Semiconductors' external indium phosphide light sources are gradually being adopted for CPO and NPO applications. Lumentum, as the largest commercial laser manufacturer, has already procured products related to the ELS architecture, indicating the architecture has gained validation through real orders.
3. Cloud transceivers and 1.6T.
Lumentum's 800G business set a record and began volume shipments of 1.6T products as planned. The company said its visibility into future cloud transceiver demand is "clearer than ever before."
The 1.6T business will continue to strengthen from the first fiscal quarter through 2027, driven primarily by hyperscalers' custom AI clusters accelerating the transition from 800G to 1.6T. Lumentum stated that in many cases, it achieved product launch earlier than its larger competitors, and it expects this market share advantage to persist throughout the cycle.
Transceiver business profitability is improving, driven by better yields, higher capacity utilization, and an increasing mix of 1.6T products. Lumentum holds a first-mover advantage in 1.6T products, while AAOI is becoming a fourth qualified 1.6T supplier for a major hyperscaler. AAOI has secured over $200 million in confirmed 1.6T orders, with certification expected to be completed within "two to three weeks." As all suppliers face capacity constraints, hyperscalers are actively diversifying across multiple vendors.
4. OCS.
Lumentum's OCS business went directly to quarterly revenue guidance of over $100 million. After successfully managing supply chain constraints and meeting strong customer demand, OCS shipments doubled from Q3 to Q4.
The company's Q1 guidance includes the first quarter with OCS revenue in the triple digits, and it indicated that demand signals for 2027 "remain very strong." Lumentum has added contract manufacturer capacity beyond its internal facilities and has expanded its product roadmap to include both higher and lower port count products, including dedicated entry-level offerings.
5. Guidance.
Lumentum raised its revenue guidance to $1.25 billion, representing 130% year-over-year growth. The CEO stated that adding nearly $250 million to the guidance increment is "quite substantial," with further room for increases in future quarters.
Approximately half of the incremental growth quarter-over-quarter comes from the components business, primarily driven by scale expansion and cross-scale expansion; the other half comes from the systems business, primarily driven by 1.6T and accelerating OCS. Paradis Labs noted that this relatively balanced structure between components and systems makes Lumentum's business more sustainable, with financial performance not dependent on a single product line.
6. Additional information.
Lumentum did not provide updates on the Greensboro project during this earnings call or in the report. The indium phosphide wafer fab timeline was originally a key point of focus, but given the company's repeated mentions of capacity at its two Japanese fabs, questions remain. AXT has reserved capacity through 2031, indicating recent momentum in substrate demand growth.
The FCC's ban on Chinese transceiver products remains a net positive for Lumentum's pursuit of 1.6T market share, but management did not comment on this, and analysts did not raise related questions during the call.
Paradis Labs noted that both Lumentum and AAOI are approaching important inflection points for laser business ramp-up, with ELS, NPO, and CPO set to layer on top of the already accelerating 1.6T and OCS systems businesses.
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