Summary of CPO/NPO Market Update 🚀 NVIDIA CPO: Spectrum-X CPO switches for Scale-out are officially in mass production. Our forecasts: 15k units (2026E) & 100k units (2027E). *Supply Chain: To support the CPO Scale-Out ramp, TSMC has expanded CPO inspection equipment capacity (notably adding Insertion 2/3 capacity), alongside strong progress from key suppliers in FAU, shuffle boxes, and system assembly. * Scale-Up Architecture: Rubin Ultra is now expected to adopt a 9-18-9 tray design. While mechanical challenges from the 0.75U height could potentially lead to a reversion to a 10-9-8. This shift will have no impact on optical engine (OE). 📈 OE Shipments: NVIDIA platform optical engine (OE) shipments expected at 6m (2027E) & 19m (2028E). Total industry-wide OE hitting 11m & 40m. ☁️ Amazon Trainium 4: AWS projected to consume 5m (2H27E) & 12m (2028E) OE units, primarily 6.4T specs. * Trainium 4 will likely have 3 configurations, with two expected to adopt NPO. 💡 Key Plays: LITE/COHR (CW laser upside), Browave (10k+ shuffle box per quarter in 4Q26E, followed by acceleration in 1H27E.), SMTC/MRVL (TIA/Driver), TSEM (NPO PIC exposure). #NVDA# #LITE# #MRVL# #SMTC# #TSEM# #Browave# #CPO# #NPO#

$LITE CEO: "Next year with the advent of CPO and NPO in 2027, our estimates are that we'll be undershipping demand... By 70%. Literally 70%. So we can only supply 30%. And this has caught us by supply. By 2029-2030, we get to some level of balance." Source: Global Photonics Economic Forum Day 1 (7:57:15 - 7:58:00) Any other players with laser capacity coming online are probably going to get more market attention soon.

Research|Optics: ECOC 2026 Takeaways, NPO Gains Momentum as Slow and Wide Takes Shape We attended ECOC 2026 in Málaga last week. The debate between slow and wide and fast and narrow was a recurring topic in presentations and plenary sessions. Companies presented microLED and micro-VCSEL designs and discussed their performance, manufacturing challenges and production timelines. NPO was also in focus, with live NPO demos on the show floor and more discussion of how and when it ramps. This note covers our takeaways from the presentations, demos and conversations with companies, including developments in NPO, scale-in, external lasers, retimers, DSPs, coherent-lite and test and measurement. Detailed Report

Abstract - Semtech (SMTC) Initiated Buy on 1.6T and NPO • Initiates with Buy, $180 PT (25x FY28E P/E). • Transitioning from an analog chip company to an AI interconnect beneficiary w portfolio spanning ACC, TIA, drivers, lasers and NPO analog solutions. • Guides FY27 AI revenue >$350M; we forecast $466M (FY27E) → $1.22B (FY28E), driven by 1.6T. • Google TPU expansion to be a key catalyst for CopperEdge ACC. • NPO adoption could be the next major growth leg beyond 2027 as DSP removal increases analog content. • Believes NVIDIA and leading CSPs are evaluating NPO deployments. • NPO market size : we forecast 38M NPO optical engines in 2028, suggesting a multi-billion-dollar TIA/driver TAM • Acquisition of HieFo strengthens its laser portfolio and expands optical content opportunities. #AI# #Semiconductors# #OpticalNetworking# #SMTC#

$POET closed CIOE on Friday evening saying its optical engine product lines can address the NPO market for 6.4T and above. Two days earlier, on the same stand, its own sales people were describing 800G in mass production and 1.6T in small-volume build with multiple customers running qualification. I put the two sentences next to each other, because they are not the same kind of sentence. Can address is a claim about reach. In mass production is a claim about shipment. Both are true at the same time and neither contradicts the other. What moved between Wednesday and Friday is which one the company led with, and the speed tier it chose to lead with went from 1.6T to 6.4T and above. The number that would settle it did not arrive. This whole CPO and NPO conversation has spent a year converging on high-power continuous-wave light sources, and Blazar is aimed directly at that. The closing post describes it as a next-generation high-power multi-channel hybrid laser. High-power is an adjective. There is still no figure attached to it, and the show is now over. For a sense of what such a figure would eventually have to stand beside: Lumentum has published its co-packaged external light source at 400 mW in the first generation, 350 mW per laser in the sixteen-channel version, and a higher class above 1.0 W at 25 degrees. Those are numbers on a page. Nothing comparable has been put out for Blazar. Then the balance sheet, which reorganises the whole thing. Second-quarter revenue was $569,925. Net loss $11.3m. Cash and short-term investments $796.3m, after a $400m raise in May. Divide those into each other. The cash position is worth 1,397 quarters of the current revenue line. Measured against the current quarterly loss instead, it covers roughly seventy quarters. Whatever is uncertain here, runway is not the uncertain part. Which is why I read the 6.4T line as positioning rather than as a stretch. A company sitting on seventeen years of cash at the present burn has no reason to oversell a quarter. It can talk about where the architecture reaches and let the shipping line catch up behind it. The risk in that posture is not solvency, it is duration: the gap between the capability sentence and the shipment sentence staying open long enough that the market stops paying for the first one. The one forward figure carrying a dollar sign is Lumilens. An initial order of $50m, which the company calls the first phase of a relationship that could scale past $500m cumulative over five years. At the current run rate the $50m on its own is 88 quarters of revenue. The $500m ceiling is 877. $POET traded at 7.85 mid-session, up 3.4%. What would change my read: a published output power per channel for Blazar, or the first 1.6T customer moving from qualification into a production order. Either one converts a capability sentence into a shipment sentence, and on this name that is the only conversion that counts. Revenue has now risen sequentially for six straight quarters, so the direction is already established. What is missing is the size of the step, and the company has the cash to take its time deciding when to show it.

Citi's TMT note has Lightmatter calling lasers and optical fiber "the next HBM." NPO 2027. CPO 2028-29. Pluggable, NPO, CPO all burn light, and all three need the same lasers and the same InP underneath. Bullish for: $AEHR - testing, the actual gate on CPO $AXTI - InP substrate $LITE - lasers $COHR - lasers $FN - engine assembly $MRVL - the signal still has to travel $AAOI - pluggable runway

It will be consensus, if it isn't already NPO is going to ramp HARD first. This was from our report on the copper to fiber inflection in March. I know the sub is expensive but you would have known early if you read it :)