my prediction on the photonics/laser stuff is, there will be more and more SiPho as we add more lanes and need better mux/demux, TFLN is not gonna win for 400G per lane although you hear it a lot, as some folks already made it working on SiPho and the TFLN price and volume won't be even close to beating SiPho. DSP will be dominated by broadcom and then marvell for a long time, but SiPho is just so much easier to design and make, and the Chinese companies will be taping out most of the SiPho chips and making all the way to various engines and modules. Laser moat of the US companies won't last long, it's not that complicated, and more similar to e.g. battery optimization than complex digital circuit design, and Chinese companies already make most of the andriod and lidar vcsel chips, some of them pretty high power and spec. They control most of In and InP production as well. US laser companies will have to and are already building InP fabs in SEA, theres no In or In purification in the US. If I know more chemistry, I would start an ITO recycling company now.

- Tower Semiconductor ($TSEM) and NewPhotonics have begun high-volume shipments of laser-integrated silicon photonics optical engines, with current production products supporting 800G and 1.6T. - The key technology is $TSEM's PH18DA SiPho platform, which heterogeneously integrates InP devices to combine lasers, SOAs, modulators, and photodetectors on a single PIC. - NewPhotonics' NPG102 uses a 200G-per-lane architecture for 800G and 1.6T PICs, targeting optical architectures ranging from FRO/LRO/LPO and XPO pluggables to NPO. - The more important next step is the 6.4T NPC505 chipset, a CPX-MSA-compliant NPO solution scheduled for volume shipment in 1H27, targeting both scale-out and scale-up AI interconnects. - $TSEM says NewPhotonics is the first customer to bring heterogeneous laser-integrated optical engines on PH18DA into high-volume production, although specific customers and shipment volumes were not disclosed. > The most important phrase here is “high-volume shipment.” This suggests $TSEM's silicon photonics platform has moved beyond PDKs, tape-outs, and prototypes into actual volume manufacturing of laser-integrated PICs. > Integrating the laser, SOA, modulator, and detector around a single PIC can reduce component count and optical-engine assembly complexity. As AI interconnects evolve from pluggables toward NPO and eventually CPO, the value of a highly integrated, scalable SiPho foundry platform could increase materially. > From an investment perspective, the key point is that $TSEM is increasingly becoming more than a legacy analog foundry and is beginning to establish itself as a merchant SiPho foundry tied directly to AI optical connectivity volume production. With 800G/1.6T already shipping and 6.4T NPO targeted for 1H27, the $TSEM SiPho story is gradually shifting from future optionality to a production ramp story.

Mizuho on opticals: We see CW laser capacity ramping sharply from ~83M units in 2025 to ~427M by 2029E (Ex-7), driven by SiPho pluggables at 1.6T/3.2T and the initial NPO/CPO transition into 2027-2029E as we see yields improving. We see $COHR profitability lagging as we believe it relies on external lasers for it's leading-edge products (also sourced from LITE) and its business model remains more transceiver-heavy which is lower-margin vs LITE, which we see as more laser-oriented. On margins, LITE continues to ramp GMs sharply from low-30% in early 2024 to the low-50% range in 2026-2028E, while COHR rises more gradually to only the low-40s%, resulting in a 10-11ppt gap. We believe ELS pluggable modules housing a laser source could start to ramp as well. ELS as the back plate pluggable component retains serviceability in case of a component failure, while enabling laser light to transmit the converted optical signal and advance more efficient optical architectures. $LITE has noted orders for ELS have begun, with we believe potentially 2x content opportunity compared to laser chips alone. Ex-China, we believe COHR is the largest transceiver assembler with ~17% market share, differentiated via deep InP vertical integration and high in-house component supply. We note some tailwinds with $NVDA, incl. $2B investment and multi-year CPO/CW supply agreement through YE-2030E. We estimate LITE's Cloudlight business (acquired Nov 2023) is ramping strongly toward ~$900M C26E revenues and ~$1.2B by C27E, but remains smaller at >6% market share. Similar to COHR, LITE is leveraging CW/EML in house manufacturing, but we believe it is entirely reliant on in-house laser chip supply, with a path to mid-30% GM. FN is an important assembler, serving NVDA's designed transceivers alongside merchant OEM contracts. $AAOI (NC) is another key domestic assembler, operating three Taiwan facilities (~795K sq ft) with a new Pearland, Texas facility (800G/1.6T) and an estimated SOP in early 2027E.

CPO equipment is starting to see a shortage, according to HIWIN Technologies. The company warned that accelerated commercialization of SiPho has led to demand for packaging and testing equipment to explode, resulting in some key equipment and precision components to be in a shortage. > Orders for silicon photonics inspection equipment have seen a "surge" since the third quarter. > HIWIN recently received orders for thousands of sets from a leading international CPO equipment manufacturer, representing a nearly 30-fold increase compared to the entire previous year. > Current delivery time for precision motion and transmission components is about three months, and for positioning platforms it is about three to four months. > Demand for FAU fiber array units, miniature linear guides, linear motors and nanometer-level alignment platforms is increasing simultaneously. > Da Yin's (CPO equipment component manufacturer) overall order visibility is currently up to six months, and that of its silicon photonics positioning platform is even higher at nine months; HIWIN's silicon photonics inspection equipment visibility extends all the way to the second quarter of next year.