Okay... just some more weekend shower thoughts abo

Okay... just some more weekend shower thoughts about $XFAB.

I still feel like it could be the next $Tower Semicon(TSEM.US), just early stage at a $1.4B MC?

They kinda leapfrogged current gens (which $Tower Semicon(TSEM.US) are getting volume from) to compete for H2 2027 CPO scale up inflection point ($Advanced Semiconductor Engineering(ASX.US) docs cite Xfab (aka. photonixFAB) as focusing on CPO)

By building out some black magic MTP (transfer printing) architecture for lasers w/ other stuff like TFLN.

Basically next-gen integration IP, they're still behind on yields, sure.

But $NVIDIA(NVDA.US) evaluating it for transceivers/switches to see if it can volume ramp. That $Nokia Oyj(NOK.US) sets the specifications/assembly for. (nvidia invested in nokia for this these switches/networking too btw).

And if their MTP supply chain works... (eg. with Smartphotonics providing lasers, EU players doing assembly).

It basically volume ramps with $NVIDIA(NVDA.US) just like why Nvidia signed long term agreements with $Tower Semicon(TSEM.US)?

Downside risk?

Already below replacement book value, can always go lower yeah, but typically to a certain point.

Maybe more CHIPS act subsidies next few months from chips act 2. If it doesn't go well there's SiC (152% Y/Y Growth, 195% Y/Y SiC wafer shipment growth)/GaN power semi upside.

Europeans /LLMs will say "oh evaluations doesn't mean it's a future contract!".

This is kinda different since the European Union is behind this effort and $XFAB for soverign photonic supply chains.

Not your typical company + hyperscaler evaluation, since $NVIDIA(NVDA.US) wants to be nice to Europe's regulators. They'd prob be pissed if nvidia just stayed in US/Taiwan/China.

So if they can make this MTP black magic work with mass production, feels almost for sure nvidia/nokia volume ramp on some tiny $1.4B silicon photonics foundry or at least throw them a bone with smaller contracts.

In terms of timelines, maybe just a months early since it volume ramps H2 2027/H1 2028 (which happens to be in line with CPO scale up timelines)...

Or just unknown because they named their project something stupid like photonixfab?

Like XFAB Photonics would have been better? so institutions/screeners can connect the dots when looking at CPO silicon photonic foundry players?

Automotive should also coming out of a slump medium term, sped up by self-driving (TSM Chairmain comments yesterday said ai automotive was TSM's growth vector alongside robotics). So their core business also should pick up speed too medium term.

Obviously markets/europeans want a "Nvidia signs $2B+ contract, XFab volume ramping 2027!"

But by then it will be a $9B+ company and you miss out on all the upside. And especially since everyone analyst/institution is blind to volume expectations for these....

Normally don't invest in companies in evaluation stages, but this just seems very de-risked by EU sovereignty + Gov backing, and you have Nvidia + Nokia there for volumes if they can make the IP work.

I think markets are probably missing something here... there's almost 0 value being assigned to being CPO exposure in Europe as their long term upside.