Lumentum (LITE) Barclays 23rd Annual Global Technology Conference summary

Market dynamics and demand outlook

• Experiencing capacity constraints across all product lines, with demand exceeding supply through at least 2027.

• EML lasers are sold out for 2026 and largely booked through 2027, with strong backlog and customer commitments.

• Pricing has increased due to the seller's market, with larger customers securing longer-term contracts at elevated prices.

• Allocation decisions balance gross margin per wafer and strategic market positioning, with most capacity directed to EMLs but some reserved for CW lasers and internal needs.

• Capacity is fungible between EML and CW lasers, allowing flexibility to shift production based on demand and technology trends.

Technology and product trends

• 800G remains the largest node for the next year, with 1.6T volumes becoming more substantial by 2026.

• Silicon photonics is expected to gain share faster at 1.6T, but current supply constraints make technology choice secondary to availability.

• VCSELs are less relevant at 1.6T due to performance and range limitations, with single-mode architectures favored.

• Optical port shipments are projected to reach 70–75 million in 2026, with hyperscalers driving most of the demand.

Capacity expansion and supply chain

• Incremental capacity increases are underway, with a 40% ramp in EML capacity on track and assembly capacity being accelerated.

• No single equipment bottleneck; constraints are spread across multiple tools and steps.

• Supply chain constraints extend to DSPs and semiconductors, with industry-wide shortages impacting ability to scale.

• OCS supply chain is still maturing, with no immediate constraints but planning underway for future ramp.