Key points
- Lumentum says optical parts are sold out into 2029
- Customers are booking orders for 2030
- Optical stocks rose; broader AI networking stocks lagged
Lumentum (LITE) said its production capacity for AI data center optical parts is sold out through early 2029, sending shares of optical component makers higher on October 9. "We are completely sold out, so there's no end in sight," Chief Executive Michael Hurlston said in a Tokyo interview with Bloomberg.
Hurlston said Lumentum cannot meet about 70% of demand for some products through 2027 and about 30% for certain others through 2028. Customers are already starting to lock in orders for 2030, he said. "We are really trying to catch up, add capacity as fast as we can, but we are very, very far behind what customers want," he said.
Capacity is now committed into 2029
Six months ago, Hurlston had said Lumentum's capacity would be fully committed through 2028. In September, Stifel said Lumentum management told it that demand for its most powerful AI lasers still exceeded supply.
Lumentum makes indium phosphide lasers and other optical devices that move data inside AI data centers. It has expanded production at its factory near Tokyo twelvefold over two years and plans to invest at least $350 million there and at a neighboring site. It has also added capacity in England.
Hyperscalers, the large cloud companies, have agreed to share some of the capital spending risk. "These hyperscalers are willing to put money behind it," Hurlston said. He also said Lumentum would like to make an acquisition within about a year to add capabilities.
Laser makers rose, but not the whole group
As of 10:58 a.m. ET, Lumentum was up 7.2% at $1,124.13, Applied Optoelectronics (AAOI) was up 5.9% at $112.11, and Coherent (COHR) was up 2.6% at $310.31. Not every AI networking stock followed. Astera Labs (ALAB), which makes connectivity chips, was down 2.5%. Both Lumentum and Coherent received $2 billion investments from Nvidia (NVDA) this year.
Supply could get tighter. If the US goes ahead with a reported ban on new Chinese optical transceiver models, Lumentum and Coherent wouldn't be able to fill the gap left by Chinese makers such as Innolight, Counterpoint Research said, according to the Bloomberg report.
