Research|Optics: Conference Season Takeaways - Supply Tightness with Rising Prices; CPO/NPO and Scale-Across Accelerating

In this note we summarise conference-season optics takeaways across recent investor conferences. Our senior analysts and would be attending the OCP Global Summit in San Jose on October 12–15 and represent Funda at Semtech’s Analyst Day on October 15. Please feel free to reach out.

Lumentum

• Lumentum mentioned that laser demand still exceeds supply. They expect shortages to last another couple of years. New orders are coming in at the higher prices already agreed or above.
• CPO volumes continue to rise on schedule. Optical scale-up should start in H2 2027 and grow in 2028. Lumentum sees a roughly equal split between CPO and NPO in optical scale-up, with external lasers in all CPO systems and at least half of NPO systems.
• Coherent is the only other supplier Lumentum sees in high-power CPO/NPO lasers. Dr. Wupen Yuen, President of Global Business Units at Lumentum, expects Coherent to solve the challenges of making these lasers reliably at volume, but gave no additional color. Customers need a second supplier ramping during 2027, possibly in H2, to meet 2028 scale-up demand. Chinese competition is still mainly in lower-power CW lasers for pluggables. Lumentum sees little new competition in merchant EMLs.
• Capacity is being added in San Jose through 2027, the UK from 27Q2 and Greensboro (the site acquired from Qorvo) from 28Q2. The timing depends mainly on customer qualification.
• Lumentum’s $40 EPS guidance for FY28 assumes more OCS units at Lumentum’s largest customer. Potential uses inside racks could take the OCS market beyond its earlier $8b estimate.
• Shipments of complete external laser modules should begin in H2 2027. CW laser margins are approaching EML margins as yields improve and chips get smaller.
• Lumentum also believes that scale-across demand should lift pump laser volumes 4x over roughly five quarters. Lumentum has signed multiyear agreements with all major network equipment manufacturers at higher prices that help fund new capacity.
• On scale-in, Dr. Wupen Yuen compared bandwidth across the four scaling domains:

“Scale across is one, scale out is 10 in bandwidth, scale up is 100, scale in is 1,000 ... as intensity of optical demand increases, and with XPU numbers going up, I would say Lumentum’s best days are yet to come.”

In our scale-in note, we made the same comparison with roughly 10x more bandwidth at each step inward, which puts scale-in around 10x scale-up and 100x scale-out. Our report covers where the term is showing up and what it means, optical links moving closer to compute and memory including die-to-die and die-to-memory connections, from millimeters to about one meter.

Corning

• Their Q3 sales are tracking at the high end or slightly above guidance. Corning expects to reach its $20b sales run rate one quarter early, with Q4 above Q3 and high-teens growth continuing into 2027. The targets are still $30b by end-2028 and $40b by end-2030.
• Corning’s Verizon deal, in addition to Lumen and Zayo, should bring in annual data center interconnect sales to $1b well before the end of the decade. Corning now thinks sales can exceed that.
• Scale-out is driving sales today while scale-up optics should start around late 2027. Corning aims to build a $10b NPO/CPO business by 2030 from no sales today. The timing will depend on customer adoption.
• Corning is adding 50% more fiber capacity and expanding connectivity capacity 10x. Customers give it two to three years of visibility and some help fund capacity upfront. It has enough fiber capacity today but expects demand to exceed current capacity. Operating margins have reached 20% and should improve further.

MaxLinear

• The midpoint of 2026 optical revenue guidance is now $220m, up from an initial expectation above $100m. This is mainly driven by demand, share gains and new customers being added. Customers are placing orders or giving forecasts through 2027. Lead times remain 26–28 weeks.
• Its 1.6T Rushmore ramp should begin around mid-2027 with full production expected in 2028. MaxLinear cited DSP prices of $80–100, versus $35–50 at 800G. Adding the TIA takes 1.6T content above $100. Its market share target is still 20–25% within two to three years, from roughly 5–7% today.
• Samsung gives customers an alternative to TSMC. MaxLinear is comfortable with supply for its planned 1.6T ramp. Lower power consumption, a wider product range and 18 months of mass production are helping it win customers.
• Asked whether NPO/CPO would reduce DSP sales, MaxLinear said higher-value TIAs, separate drivers and SerDes should increase its total content. Gross margin guidance is now at 60%. A larger share of sales from infrastructure helps offset higher wafer costs.
• Panther storage accelerator revenue was $15–20m in 2025. MaxLinear expects it to double in 2026 and could double again in 2027. Management said the AMD reference design is bringing in new customers.

Marvell