Macom Tech

Goldman Sachs: companies we visited see pricing competition remaining healthy, with 800G optical module pricing decline within single digits in 2027, and 1.6T optical module price to sustain at $700+.

$Coherent Corp.(COHR.US) $Lumentum(LITE.US) $Applied Optoelectronics(AAOI.US) $Macom Tech(MTSI.US)

Goldman Sachs: Global Optical Transceiver Shipments

> Shipment & Forecast Revisions: Goldman Sachs raised global optical transceiver shipments for 2026–28E by 21%/31%/31%. For 1.6T and above, shipments were raised by 29%/61%/50% for 2026–28E, driven by higher rack-level/ASIC server shipments, increased optical module usage per GPU, and specification upgrades.

> Market Size Projections: The global optical transceiver market is expected to reach US$68bn in 2026E, US$131bn in 2027E, and US$148bn in 2028E. The 800G and above segment is projected to grow at a +69% CAGR to reach US$45bn, US$108bn, and US$130bn respectively.

> Volume and Speed Milestones:

800G/1.6T shipment volumes are projected at 45m/33m units in 2026E, growing to 49m/71m units in 2027E.

3.2T shipments are expected to ramp up to 23m units in 2027E and 68m units in 2028E.

> Technology Adoption: Silicon photonics is expected to account for 60% of 800G, 80% of 1.6T, and 80% of 3.2T optical transceivers.

$Coherent Corp.(COHR.US) $Lumentum(LITE.US) $Applied Optoelectronics(AAOI.US) $Macom Tech(MTSI.US) $NVIDIA(NVDA.US)

I know everyone’s watching $NVIDIA(NVDA.US) earnings right now…

But did you know Landmark signed a 4 year CW agreement with US customer to ensure “sufficient supply”?

So now you have:

- $Lumentum(LITE.US) (capacity gone)

- $Coherent Corp.(COHR.US) (capacity gone)

- Landmark (capacity committed)

- $Applied Optoelectronics(AAOI.US) (capacity for transceivers)

- $Macom Tech(MTSI.US) (not online)

- $Semtech(SMTC.US) (limited)

I remember saying earlier this year CW lasers would be the next optical shift and heavily bottlenecked by Nvidia?

So fun watching this play out, with players signing LTAs already to 2030 (signaling less availability for other players).

Implications for $SIVE / Win Semi are very material as one of the few remaining CW merchant suppliers with capacity (+ CPO-grade lasers).

Let’s see how they execute.

We got $Lumentum(LITE.US), $Macom Tech(MTSI.US), $Applied Optoelectronics(AAOI.US) all pointing to extreme demand imbalances with lasers/TIA/DSP/etc from earnings...

And now Elazr GM at their investor conference stated:

Optical supply is still far behind the market demand, the expected AI optical supply chain are likely to continue for years.

- "the entire supply chain is out of stock"

- "the supply is still far behind the market demand"

- "the shortage will continue to the next few years"

"Whether it is PCB, carrier board, laser chip, or even related packaging capacity, as long as the AI supply chain link, almost all are in short supply."

When demand visibility extends for years with the supply chain bottlenecked:

It's getting difficult not to see photonics echoing the memory supercycle entering 2027.

$Macom Tech(MTSI.US) earnings transcript:

"Customers are coming to us with urgency due to the general supply shortage of indium phosphide DFB lasers"

Emphasis on "Urgency", CW "DFB lasers", "coming to us".

CW DFB names, such as like $SIVE and $Lumentum(LITE.US) should be happy to hear about this laser bottleneck getting validated.

Lumentum leads in market share of laser chips

$Lumentum(LITE.US) $Broadcom(AVGO.US) $Coherent Corp.(COHR.US) $Macom Tech(MTSI.US)

Nomura: Optical

Market Overview & Growth Projections

> Revenue Expansion: The global datacenter optical transceiver market is projected to reach USD 47.7bn in 2026F and surge to USD 144.2bn by 2028F, representing a rapid CAGR of 74% from 2026 to 2028F.

> Primary Growth Catalyst: Market expansion is primarily driven by robust, buoyant demand coming from large language model (LLM) training and inference workloads.

High-End Transceiver Shipment Forecasts

High-end speeds (800G and 1.6T) are experiencing stronger momentum due to accelerated technology upgrades within AI networking segments:

> 800G Transceivers: Projected shipments stand at 33.8mn units in 2026F, scaling to 55.0mn units in 2027F, and 78.0mn units in 2028F.

> 1.6T Transceivers: Projected shipments stand at 26.1mn units in 2026F, increasing to 71.5mn units in 2027F, and reaching 126.0mn units by 2028F.

> Next-Generation Speeds (2.4T / 3.2T): Initial shipments are expected to commence in 2027F and 2028F, ultimately reaching volumes of 5mn units and 2mn units respectively by 2028F.

Architectural Evolution & Supply Chain Dynamics

> Co-Packaged Roadmap: As the industry migrates toward co-packaged optics, deliveries of NPO (Near-Package Optics) and CPO (Co-Packaged Optics) products are expected to start rolling out between 2027F and 2028F, serving as fresh demand multipliers for high-power optical lasers.

> Supply Chain Constraints: Unprecedented demand cycles continue to pressure optical chip suppliers' fulfillment capabilities, giving IDM players like Yuanjie a competitive edge in a supply-constrained market environment.

$Coherent Corp.(COHR.US) $Lumentum(LITE.US) $Applied Optoelectronics(AAOI.US) $Macom Tech(MTSI.US) $Broadcom(AVGO.US)

$IQE has unfortunately not been performing well recently.

However, we've only had net-positive news since May:

- $Tower Semicon(TSEM.US) multi year InP epiwafer agreement in June w/ minimum purchase commitments from year two

- $14M multi year PO from a "strategic global technology leader" for AI/datacentre applications this week

- $Macom Tech(MTSI.US) board involvement after anchoring a £81M raise to strengthen balance sheet

That said, it does seem like IQE is simply resetting (similar to other high beta names like $SIVE) after going up parabolically in a few months.

And Chinese export curbs on gallium + InP feedstock are inflating input costs with management also saying that they're sharing that pain with customers.

I'm also looking at the fact that their balance sheet almost ruined them a few years ago - which is now solved thanks to £45M from MACOM as a strategic investor tied to LTAs.

IQE is one of the only Western epi houses that can supply InP epiwafers at a scale that actually matters.

And InP sits under every optical interconnect going into datacentres.

Tower didn't sign a multi year supply deal and settle a long standing patent dispute in the process because it had alternative routes to source supply...

So currently, you've got:

1. A repaired balance sheet.

2. An anchored strategic partner w/ Macom.

3. Contracted InP volumes.

4. An option on photonics too.

However, risks are definitely real and please do not act on my words alone...

They've had execution issues in the past e.g. too much internal resource in their wireless segment which has been dying a slow death over the past couple years. (They're correcting that now just by going from their investor decks).

Plus of course a long dilution history. And China risks impacting input costs.

Drawdowns like the one we're in currently are all part of the game.

Where highly volatile businesses = highly volatile returns.

$SpaceX(SPCX.US) / Elon Musk acquires Mesh, an optical networking startup.

Which is working on 1.6T OSFP (pluggable).

It’s seems they own the optical engine/packaging side of things, but likely sources CW DFB lasers off merchant companies.

$SIVE is one of the more startup friendly plausible merchant suppliers as seen with Ayar to $POET Tech(POET.US)?

Maybe $Lumentum(LITE.US) and $Macom Tech(MTSI.US) that were have a little history too, but less so.

Regardless it’s very positive a lot of startups recently like Celestial have been acquired by Marvell.

For both merchant laser supplier revenue (working with startups -> having hyperscalers like SpaceX drive revenue after being designed in already).

As well as valuations from M&A desirability.

Goes to show how optical interconnects is the right direction if Elon Musk is directly buying these companies.

$IQE & $Tower Semicon(TSEM.US) enter a multi-year InP epiwafer supply agreement.

Do you understand how f*cking huge this is for IQE?

-> IQE is being designed into the pluggable wave + next-gen modulator/OCS roadmap.

-> Confirms IQE as a qualified, non-Chinese InP epiwafer source.

-> Diversifies IQE's optical customer base beyond $Lumentum(LITE.US) / $Macom Tech(MTSI.US) to foundry in $Tower Semicon(TSEM.US). So multiple Tier-1 optical anchors.

Quick fun fact: IQE sued Tower in 2022 for misappropriating trade secrets to obtain patents.

So this Tower agreement lets IQE keep optionality on RF SOI type + engineered substrate/layer transfer applications without IP risk.

And converts a former enemy into a customer - always a massive bullish signal that a company's products are critical.