Lumentum CEO projects indium phosphide shortfall to exceed 30% as AI laser demand surges
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Lumentum CEO Michael Hurlston told the RAISE Summit in Paris this month that indium phosphide supply is running 30% below customer demand. The shortfall may widen as Nvidia and hyperscalers shift to co-packaged optics, Hurlston warned, because the technology still requires indium phosphide lasers.
The Supply Warning
Lumentum CEO Michael Hurlston said at the RAISE Summit that while telecom clients bought lasers in the hundreds, Nvidia and hyperscalers now seek hundreds of millions. The company’s five indium phosphide fabs are shipping more than 30% below customer needs. In March, Nvidia wrote $2 billion in checks to Lumentum and Coherent — the two dominant suppliers of high-speed datacom lasers — to secure future capacity and purchase commitments. Lumentum posted record revenue of $808.4 million in its fiscal third quarter, up 90% year over year, on components revenue of $533 million and an 80% jump in pump laser shipments.
Material Bottleneck
Indium phosphide has a direct bandgap of 1.34 eV, enabling efficient conversion of electrical current into photons, unlike silicon which cannot generate light. Every silicon photonics platform — including those from Nvidia, Broadcom, Marvell, and Cisco — requires an indium phosphide laser to supply light. Moving from pluggable transceivers to co-packaged optics changes the laser type to high-power continuous-wave sources but does not eliminate the material from the bill of materials. Nvidia’s Spectrum-X Photonics switches use four times fewer lasers per port than pluggable equivalents, but the total port count is exploding, with 512 ports at 800 Gb/s delivering 400 Tb/s of switching.
What's Next
Nvidia expects its co-packaged optics switches to ramp later this year, but it remains unclear whether Lumentum and Coherent can expand indium phosphide production fast enough to meet the surge in laser demand.
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Lumentum CEO projects indium phosphide shortfall to exceed 30% as AI laser demand surges
