Equity research

MIC report with a supply/demand assessment on various AI components.

HBM/Commodity DRAM: tight through 20227-2028

High-end MLCC: tight in 2027; 2028 to be watched

ABF Substrate: may ease in 2028

ABF Buildup Film: tight in 2027; may ease in 2028

High-end CCL: tight in 2027; may ease in 2028

T-Glass: possible turning point in H2'27

NAND: may ease from late 2027 through 2028

$Micron Tech(MU.US) $DRAM $EWY $DISK $Sandisk(SNDK.US)

Hock Tan with probably the worst explanation ever in countering the circular financing claim:

"Of the six, two of them, two of the strongest guys do not have the cash flows to be able to generate the compute needed to train and create inference, productize their models."

"This is not circular financing. When a customer sees the demand that drives up their own demand and they do not have to use us necessary, they can get it somebody else, that is not circular finance. We are using financing to create demand."

$Broadcom(AVGO.US)

Qualcomm's EVP, CFO, and COO, Akash Palkhiwala, says they have another hyperscaler engagement similar to Amazon:

"we have a very strong engagement with another hyperscaler that we have not disclosed, but similar to the technology engagement we have with Amazon."

$Qualcomm(QCOM.US) $Microsoft(MSFT.US) $Meta Platforms(META.US) $Alphabet(GOOGL.US) $Amazon(AMZN.US)

CVP of Financial Strategy and Investor Relations at AMD, Matt Ramsay, says copper will continue to be used for quite some time:

"I do not think you will see it be a point-in-time thing where everybody just decides as an industry, okay, no more copper, now we are going to go optics."

"You should think about copper and optics living side by side for a number of generations."

$Semtech(SMTC.US) $Credo Tech(CRDO.US) $Amphenol(APH.US) $Lumentum(LITE.US) $Coherent Corp.(COHR.US) $NVIDIA(NVDA.US) $AMD(AMD.US)

According to @FundaAI, GPT-6 used roughly 10x the training compute of the GPT-5 generation.

"Based on our industry discussions, experiments, RL, synthetic data generation and supporting infrastructure can together consume several times as much compute as the main pre-training run, potentially as much as ten times."

"Once TPU 8t and Vera Rubin ship in volume, the next pre-training acceleration can begin, and large-scale interconnect and optics benefit most in that cycle."

$NVIDIA(NVDA.US) $Alphabet(GOOGL.US)

Citi: Scale-out should be one of the major scenarios in

the global datacom optical interconnects market due to

expanding AI datacenter; scale-up should emerge and

become vital

$Lumentum(LITE.US) $Coherent Corp.(COHR.US) $NVIDIA(NVDA.US)

IQE reiterating what the industry has said about InP:

"As we've previously highlighted, we are seeing high demand for our indium phosphide and gallium arsenide optical interconnect technologies."

"Indium phosphide substrates are becoming some of the bottlenecks around significant volume increases."

$AXT(AXTI.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)

MS Hwang from Counterpoint Research believes YMTC could reach 18% global NAND market share in 2028.

> 2028 could be an inflection point in pricing dynamic

> Demand is expected to remain stable through 2028 due to AI-driven growth

> Chinese firms are increasing their tool localization rate

$Sandisk(SNDK.US) $EWY $DRAM $DISK

Several important names reported this week and last week, including Nvidia, Dell, HPE, Broadcom, Ciena, and Credo.

Almost all of them mentioned how demand exceeds available supply, hindering their growth for the following quarters.

Looking through their earnings call, almost all of the compute/server companies mentioned memory and substrate as a significant supply constraint.

Broadcom specifically mentioned "demand for lasers, whether it's EML lasers, CW lasers, is far surpassing supply out there in the industry."

Moving over to optical, Ciena reported LTAs through 2029 for certain optical components. Same signal from Credo.

$Broadcom(AVGO.US) $NVIDIA(NVDA.US) $Hewlett Packard Enterprise(HPE.US) $Ciena(CIEN.US) $Dell Tech(DELL.US) $Credo Tech(CRDO.US)

Morgan Stanley: WFE

A lot of growth coming in memory and foundry/logic WFE in 2026 and 2027.

$Lam Research(LRCX.US) $Onto Innovation(ONTO.US) $ASML(ASML.US) $MKS(MKSI.US) $Sunnova Energy(NOVA.US) $Applied Materials(AMAT.US)

Morgan Stanley: server share of DRAM demand to rise from 37% in 2023 to 59% in 2028e.

$NVIDIA(NVDA.US) $DRAM $Micron Tech(MU.US) $EWY $SK Hynix(SKHY.US) $Dell Tech(DELL.US)

Morgan Stanley: Where are CXMT and YMTC positioned in memory?

The big 3 remain to have strong presence in every memory type.

CXMT and YMTC are still behind by a mile.

$Micron Tech(MU.US) $DRAM $EWY $SK Hynix(SKHY.US) $Sandisk(SNDK.US)

Never really looked into neoclouds and it might just be me, but the neocloud business looks unattractive...

The biggest supporting argument I hear for them are how high compute prices are, but does this seem dependable for this business?

On the other hand, they are:

> Capital intensive

> Riddled with debt

> Very competitive

> Low margin

If there is someone the equivalent of Nvidia in this business, its is Nebius $Nebius(NBIS.US)

Outside of that, everything looks to be low quality.

What are the barriers to entry in this business? It seems anyone can open up as a GPU vendor to hyperscalers tomorrow, and be successful. Why? Because Nvidia has GPUs to sell. Do more neoclouds hurt them? Absolutely not.

Would love to hear the counter to this. Just an informative debate. I've never done something like this, so maybe it can be useful.

Intel secures another major order for advanced packaging; SK Hynix's next-generation HBM will incorporate EMIB technology.

"South Korean memory giant SK Hynix announcing that it will incorporate Intel's EMIB advanced packaging technology into its next-generation high-bandwidth memory (HBM)."

"Industry analysts believe that when Intel previously introduced its EMIB 2.5D solution, it mentioned that the EMIB-T version incorporates TSV technology to enhance vertical power supply and support design conversion from other packaging technologies. This aligns perfectly with SK Hynix's direction of releasing HBM4 towards doubling the number of I/Os and adding TSV technologies, which is likely one of the reasons why SK Hynix adopted Intel's advanced EMIB packaging."

$Intel(INTC.US) $SK Hynix(SKHY.US)

Global Market Size for Co-Packaged Optics (CPO)

> Market Growth: The global market is projected to surge rapidly from 18.4 billion yen (~$115.7 million) in 2025, reaching 1.27 trillion yen (~$7.99 billion) by 2030, and expanding to 3.55 trillion yen (~$22.33 billion) by 2035 (forecast).

> Scale-Up (Within Rack): Representing scale-up applications makes up 68% of the market (~$5.43 billion) in 2030 and increases to 67% (~$14.96 billion) by 2035.

> Scale-Out (Switch Layer): Representing scale-out applications accounts for 32% of the market (~$2.56 billion) in 2030 and 33% by 2035 (~$7.37 billion).

(h/t @semi_journal_jp)

We need more FAUs for CPO.

"Based on the estimated shipment of approximately 20,000 Spectrum-X units this year, the optical engines required would need 600,000 to 700,000 FAUs (Fiber Optic Active Units), and this number is expected to reach millions by 2027."

"Currently, the supply chain capacity cannot meet this demand."

$NVIDIA(NVDA.US)

Goldman Sachs: WFE

Overall Market Growth

> Significant Upward Revisions: Goldman Sachs has revised its total WFE forecasts upward, projecting $150B in 2026 (a 6% increase over old estimates) scaling up significantly to $281B by 2028 (+35% vs. old estimates).

> Strong Year-over-Year (YoY) Momentum: Total WFE year-over-year growth is expected to peak at +45% in 2027, following a robust +36% in 2026.

Segment Breakdown (DRAM & Foundry/Logic Lead)

> Foundry/Logic Drive: Foundry and Logic segments account for the largest share, with 2026 spending estimated at $92B (+9% revision) growing rapidly to $162B by 2028.

> DRAM Surge: DRAM is forecasted for explosive growth, moving from $48B in 2026 to $97B by 2028, reflecting persistent high demand with YoY growth rates staying above 35%.

> NAND Lagging: In contrast, NAND is experiencing downward near-term revisions (-4% to -$13% compared to older estimates), though it is still expected to recover toward $22B by 2028.

Regional Trends (China vs. Ex-China)

> Sustained China Demand: China continues to command a robust appetite for WFE investments, expected to contribute $44.3B (29% of total WFE) in 2026 and peaking around $60.7B by 2028.

> Ex-China Expansion: The rest of the world (Ex-China) accounts for the lion's share of spending, projected to accelerate from $106.0B in 2026 up to $220.2B (78% of the market) by 2028.

(Cred @knockouttrader)

$Applied Materials(AMAT.US) $Lam Research(LRCX.US) $ACM Research(ACMR.US)

Edgewater: Feedback suggests Nvidia likely signed a multi-year supply agreement for DRAM/HBM with SK Hynix and Micron. CY27 HBM pricing is not expected to be settled until late 2H26.

$NVIDIA(NVDA.US) $Micron Tech(MU.US) $DRAM $EWY

Zhongji Innolight's Interim Report covering optics:

> Silicon photonics penetration in the global datacom optical interconnect market is expected to rise further, from about 38% in 2025 to about 73% in 2030.

> Optical interconnects accounted for about 5% of global AI capex in 2025, and are expected to reach about 10% over the long term. The global datacom optical interconnect market is projected to grow from $19.4 billion in 2025 to $98.6 billion in 2030, a compound annual growth rate of 33.8% from 2026 to 2030.

Regarding CPO:

> CPO is described as currently viewed as one of the most highly integrated optical packaging solutions, assembling the switch ASIC chip and optical engine together on the same substrate.

> The report states CPO is still in the development stage, facing challenges around technology and ecosystem maturity, manufacturing consistency, cost, and maintainability.

> Over the long term, CPO will coexist with pluggable optical modules and other connectivity solutions (rather than fully replacing them).

$Lumentum(LITE.US) $Coherent Corp.(COHR.US) $Applied Optoelectronics(AAOI.US) $Broadcom(AVGO.US) $NVIDIA(NVDA.US)

Goldman Sachs: Optical Networking Supply Chain

Too detailed to fit into just one pic...

$NVIDIA(NVDA.US) $Tower Semicon(TSEM.US) $Broadcom(AVGO.US) $Marvell Tech(MRVL.US) $Lumentum(LITE.US) $Coherent Corp.(COHR.US) $AXT(AXTI.US)

Meritz Securities: CSPs flooding requests to secure HBM supply for 2028.

$Alphabet(GOOGL.US) $Microsoft(MSFT.US) $Meta Platforms(META.US) $Amazon(AMZN.US) $DRAM $Micron Tech(MU.US) $EWY

According to the Fed minutes, expectation of a rate cut is in early 2028.

"The median respondent to the Desk survey, by contrast, expected no change in the policy rate this year or the next but expected a rate cut in early 2028."