Manager at a Global Distributor on optical compone

Manager at a Global Distributor on optical component demand:

"Overall optical components market exceeded our expectation because we were not projecting such a high growth rate for us. Customers were accelerating transition from 400G to 800G."

Vendor Growth Metrics:

"Between Coherent and Lumentum, Coherent performed the strongest."

> Coherent: Saw estimated demand growth increase by 8% quarter-on-quarter and 25% year-on-year, driven by 800G optical components, high-performance lasers, and AI cluster interconnected solutions. Coherent dominated in meeting increased optical bandwidth requirements per GPU cluster, high-fiber connectivity requirements. Overall performance was supported by increased networking investments from hyperscalers.

> Lumentum: Experienced growth in the range of 5% to 7% quarter-on-quarter, or 18% to 22% year-on-year, bolstered by cloud and AI demand growing at 25% to 35% year-on-year.

Speed Segment Breakdown:

> 400G: Remains flat or exhibits low-single-digit growth year-on-year, serving as a volume product for traditional cloud and enterprise deployments.

> 800G: Acting as the core growth engine for AI infrastructure, seeing 50% to 100% year-on-year growth.

> 1.6T: Moving from early evaluation into initial procurement or production validation testing (PVT) phases by hyperscalers, with a 30% quarter-on-quarter demand growth from a small base and a commercial ramp-up expected by 2027.

> 3.2T: Confined to prototype and roadmap discussions with fewer than 10 global customers, contributing less than 5% of current optical revenue.

Pricing & Margins:

> Average selling prices (ASPs) for 800G AI optic modules saw a 10% increase year-on-year driven by product mix and tight supply.

> Quarter-on-quarter ASP growth for 800G is tracking at 2.5% to 5%, while high optical fibers are up 1% to 4%.

> Distributor margins are tightening on mature optical products and telecom optics due to increased competition and price erosion, while high-speed AI optics maintain stability.

Competitive Dynamics & Contracts:

> Chinese vendors (such as InnoLight, Eoptolink, and Accelink) are aggressively pricing and winning share in cost-sensitive, high-volume segments like 400G and pluggable optics, primarily displacing Lumentum within China.

> Coherent typically engages hyperscalers on 1- to 3-year multi-year contracts for Al optical products, while Lumentum primarily secures 1- to 2-year strategic agreements (such as for EML lasers).

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