Prices of Indium Phosphide (InP) substrates and epi-wafers are set to jump over 10% in the 4th quarter – the biggest price hike in history – as the AI-driven optical communications boom causes severe shortages, media report. One supplier reportedly said inventory is so tight that “even with cash, you might not get anything.” InP substrate prices have risen for three consecutive quarters and are heading into a fourth, while epi-wafers are entering their third consecutive increase. Valued for high-frequency, high-speed data transmission, InP is a critical material as AI data centers shift from copper to optical interconnects (optics in, copper out.) $AXTI $SMTOF #SumitomoElectric# 5802 $LITE $COHR $AAOI

Breaking: A leaked Meta memo revealed they're spending $145,000,000,000 on AI this year and just signed long-term supply deals to lock in the hardware Their in-house AI chip "Iris" goes into production in September The companies named in the deal: • Sumitomo Electric $SMTOY *Meta's fiber optic equipment supplier under a multi-year contract • SanDisk $SNDK *Meta's NAND flash storage supplier under a multi-year contract. SanDisk already has $42,000,000,000 in minimum contracted revenue • Broadcom $AVGO *Co-designing the Iris chip with Meta. If Iris scales, Broadcom scales with it • Taiwan Semiconductor $TSM *Manufacturing the Iris chip. Every Meta AI chip ships from their fabs

Nothing like an internal $META memo getting published. Showing AI ramping as usual: - LTAs signed with Samsung and $SNDK for memory - LTAs signed with Sumitomo Electric for fiber optics - Expected to deploy 7GW compute infra this year, and doubling in 2027. - as much as $145B capex spend this year “It plans to launch a chip about every six months through 2027”

Silicon Photonics' optical transceiver market share is estimated to exceed 50% by 2027. $TSM VP of Advanced Packaging said today that silicon photonics is becoming the mainstream form thanks to the structural transformation of optical transceivers. He also stated that the real bottleneck for large-scale deployment lies in lasers, optical fibers, fiber optic connectors, and product testing. If I was to pick the "main" players instead of just name-dumping: - $LITE / $COHR: InP lasers - CW for SiPh, ELS for CPO, 200G EMLs - $AEHR: SiPh WLBI testing - $GLW: PM fibre, fibre arrays & MPO/MTP connectivity - Sumitomo Electric (5802): InP lasers + substrates Obviously you've got a ton of other names from: $AAOI for InP lasers, $IQE for InP base epi, $BESI for hybrid bonding and $KEYS / $VIAV for optical test. Feels like TSMC have been running the same narrative alongside the COUPE roadmap for a while now though. But always good to get some re-confirmations on where everyone's favourite bottlenecks sit / narratives coming from TSMC themselves.

CW laser supply for AI data centers is already being locked in through 2030. Taiwan’s LandMark Optoelectronics (3081 TT) says a US customer has signed a four-year agreement covering 2027 to 2030 for data-center CW lasers. LandMark is securing the upstream side too. In April, its board approved a five-year InP substrate agreement with Sumitomo Electric (5802 JP) covering 2026 to 2030. Today, the board approved plans for two more InP sourcing agreements: one with a US supplier covering 2027, and another with a Japanese supplier and its Taiwan unit covering 2026 to 2029. LandMark is also putting capital behind that demand. It approved up to NT$2.27 billion, or about $71 million, in equipment investment and disclosed a roughly NT$990 million, or $31 million, equipment purchase from AIXTRON.

From JPMorgan APAC Tech Comments SK hynix: Investors generally expect SK hynix’s shareholder returns to be at least equivalent to 50% of Samsung Electronics’ level, following management’s indication that it would provide an update by the end of 3Q. The market also expects FY27 HBM contract pricing to increase by more than 50%, driven by tight supply-demand conditions in commodity D5. However, our analyst Jay is taking a more conservative view, forecasting an annual contract price increase of less than 40%, given NVIDIA’s strategic importance and SK hynix’s ability to reprice annually. Investors also asked about the announced $38.1bn capex plan, which is primarily allocated to production from FY30 onward. JX Advanced Metals: Investors generally expect JXAM to increase InP production capacity by 20–30x by the end of FY29, well above management’s maintained 7–10x expansion plan, particularly as order inquiries continue to run ahead of the planned capacity ramp. The market is also likely to expect Sumitomo Electric to raise its InP capacity expansion plans.

China's control over InP exports threatens AI data centre rollout (Reuters). With 70%+ control over global output. Just as a reminder on beneficiaries: -> JX Advanced Metals: ~10% InP share -> $AXTI: InP >50% Q1'26 rev -> $LITE: maybe the cleanest large cap beneficiary -> $COHR: ~1 yr early to 6-inch InP production -> $IQE: InP is "material growth driver throughout 2026 and beyond" Sumitomo Electric win in non-Chinese InP but they're so huge that InP revenue is basically a rounding error to them. Personally treating $AXTI as a trading vehicle separately to my core hold rn after taking decent profits over the past few weeks. As core holds, I have preference to $LITE / $COHR / $IQE over $AXTI for InP-thematic exposure w/ less regulator risks. - $LITE for lower China supply beta. - $COHR for higher InP permit torque if u want it. - $IQE for the most asymmetry