Good news for the optical communications industry chain recently

Earlier, I mentioned that I felt the technical adjustments for optics were nearing the end.
Today, Tower Semiconductor announced an expansion of 300mm silicon photonics (SiPh) and advanced packaging capacity; AAOI also officially started construction of a new plant of about 400,000 square feet to expand 800G and 1.6T optical module production capacity.
At its latest investor communications meeting, InnoLight (actually “InnoLight” is the project name behind ) said that demand for 800G optical modules is stronger than previously expected, and 1.6T demand has not weakened either. Customers have expanded from hyperscalers to neocloud and AI model companies.
Judging from continuous capacity expansions by leading enterprises, what I see is that the industry chain remains confident that AI optical communications demand will hold up in the coming years. If companies believed that demand for 800G and 1.6T would quickly peak, or if they were worried that AI data center investment would slow down, then the normal business logic would be to slow down capacity expansion and control spending, rather than keep building new capacity. On the contrary, whether it’s InnoLight, Tower Semiconductor, or AAOI, the signals they have released recently are all about preparing for demand in the next few years. These capacity expansion plans don’t mean there won’t be fluctuations in the future, but at least they indicate that, from within the industry chain, the orders and demand they see still support their continued investment.
Next, the market will continue to validate this logic. Key things to watch: Nokia’s earnings report on July 23, AAOI and AXTI’s earnings reports at the end of July, and management outlook from optical communications leaders such as Lumentum and Coherent in August. If these companies’ orders, demand, and guidance can corroborate each other, then the demand logic for the entire optical communications industry will be further validated.