InP Fab Expansion and Supply Chain Bottleneck
Key Questions
What drove Lumentum's record Q3 FY26 revenue growth?
Lumentum reported Q3 FY26 revenue of $808M, up 90% year-over-year, with 90% from AI-related products and a $2B NVIDIA stake. The company raised Q4 guidance, confirming accelerating demand for AI optical components amid supply constraints.
Why is the InP supply chain considered a major bottleneck for AI optics?
NVIDIA's $4B EML lockup and additional $2B investment highlight InP capacity constraints, reinforced by AXT's $100M+ backlog surge and China's export controls causing 250% wafer price increases. Coherent and other firms report shipment drops and are expanding fabs with government support to address the chokepoint.
How is Nokia contributing to InP fab capacity?
Nokia is investing in InP fabrication facilities in San Jose, Pennsylvania, and Chandler as part of the broader optical supply race. These moves align with the 18-month development cycle shifts needed to support AI networking demand.
What alternatives to InP are emerging for AI optical engines?
STMicroelectronics is ramping its PIC100 300mm SiPh platform, while SILITH and UMC have achieved mass production of a 1.6T SiPh platform qualified by a leading cloud customer. Innolume is expanding quantum dot laser production with Veeco equipment as another potential CPO solution.
What is the next potential bottleneck after InP according to recent analysis?
CW laser supply is emerging as the next constraint, with power requirements scaling from 70mW to 400mW, 21-24 month qualification timelines, and challenges in die size and yield for CPO-grade lasers. This differentiates suppliers like Lumentum, Coherent, AAOI, MACOM, and Sivers.
Coherent's 6-inch InP fab is at roughly 50% output with fourfold wafer productivity and half the prior cost, while Lumentum expands pump-laser capacity and AXT doubles substrate capacity. AAOI is sold out through mid-2027 and scaling toward 930k units/month in 2027, making execution, yields, margins, and indium/germanium availability key constraints.