Odaily News, Paradis Labs posted on X platform, sharing key takeaways from Lumentum's earnings call as follows:
1. EML.
Lumentum saw strong EML performance this quarter, primarily driven by 100G-per-channel products; the 200G-per-channel product growth is "accelerating rapidly" and now accounts for over 25% of total EML revenue. Lumentum still expects EML shipments in December 2026 to grow more than 50% compared to December 2025, even as it shifts some production capacity toward CW lasers during that period.
Lumentum has begun selling CW laser chips for 200G-per-channel applications to "numerous customers," no longer solely for internal use. The company is expanding two indium phosphide wafer fabs in Japan and validating 200G- and 300G-per-channel CW laser and EML production processes on its latest equipment.
Coherent will report earnings tomorrow, and its business also involves 200G-per-channel EML and 400mW 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 through improved yields.
2. CPO and NPO.
Lumentum stated that major CPO customers' production plans "remain on schedule," with customer demand signals stronger than at the time of the last update. The company now expects lasers to begin ramping in the second half of next year, ahead of customers' large-scale deployments scheduled for 2028.
Lumentum has secured its first ELS module order, with delivery set 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," and even its largest CPO customer is evaluating NPO for certain new application scenarios.
AAOI expects to increase ELSFP production capacity to approximately 400,000 units per month by 2028; Sivers Semiconductors' external indium phosphide light sources are gradually being adopted in CPO and NPO applications. As the largest commercial laser manufacturer, Lumentum has already procured products related to the ELS architecture, indicating the architecture has received validation through actual 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 ramping from the first fiscal quarter through 2027, driven primarily by hyperscale cloud providers' custom AI clusters accelerating the transition from 800G to 1.6T. Lumentum said it is reaching the market earlier than its larger competitors in many cases and expects this market share advantage to persist throughout the cycle.
Transceiver profitability is improving, driven by yield enhancements, higher capacity utilization, and an increasing mix of 1.6T products. Lumentum holds a first-mover advantage in 1.6T, 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 complete "within two to three weeks." Given capacity constraints across all suppliers, hyperscalers are actively onboarding multiple vendors.
4. OCS.
Lumentum's OCS business hit quarterly revenue guidance of over $100 million directly. After successfully navigating supply chain constraints and meeting strong customer demand, OCS shipments doubled from Q3 to Q4.
First-quarter guidance includes the first OCS quarter with revenue in the triple-digit millions, and the company says demand signals for 2027 "remain very strong." Lumentum has added contract manufacturer capacity beyond its internal facilities and expanded its product roadmap to include both higher- and lower-port-count products, including a dedicated entry-level offering.
5. Performance Guidance.
Lumentum raised its guidance to $1.25 billion, representing 130% year-over-year growth. The CEO said the nearly $250 million increase in incremental guidance is "quite substantial," with further room for upward revision in coming quarters.
Approximately half of the sequential increase comes from the components business, primarily including scale expansion and cross-scale expansion; the other half comes from the systems business, primarily including 1.6T and accelerating OCS growth. Paradis Labs noted that this relatively balanced structure between component and systems businesses makes Lumentum's operations more sustainable, with financial performance not reliant on a single product line.
6. Additional Information.
Lumentum's earnings call and report did not provide updates on the Greensboro project. The indium phosphide wafer fab timeline was originally a key focus, but given the company's repeated references to capacity at its two Japanese fabs, questions remain. AXT has reserved production capacity through 2031, indicating a clear direction of recent substrate demand growth.
The U.S. Federal Communications Commission's ban on Chinese transceiver products remains a net positive for Lumentum's pursuit of 1.6T market share, although management did not comment on the matter, and analysts did not raise related questions during the call.
Paradis Labs stated that both Lumentum and AAOI are approaching an important inflection point for their laser business ramps, with ELS, NPO, and CPO set to layer on top of the already-accelerating 1.6T and OCS systems businesses.
