Saturday, October 24, 2026

@aleabitoreddit Oct 24 1 click

Serenity on X

I guess what I've seen from Chinese laser capacity expansion: 1. Dongshan/Source Photonics (索尔思): 9M/month capacity -> 22M/month Q4 -> 300m/year in 2027 (mostly EML, but blended) Claims of 1B/year "target" for laser chips with no deadline, but I'd take this as a grain of salt. 2. Shijia (仕佳): 72M/year for 100mW CW, 2-3 year project (mainly 2029 full capacity online) 3. Yunling (云岭): 18.75M/year 70/100mW CW, 3 year schedule (mainly 2029 full capacity online) 4. Ligent (纳真), some reports stated 170M target for total capacity (also blended, lot of which is 200G EML) 5. Yuanjie: ~10M/year currently, expanding for early 2027 and 2028, but no quantities. 6. Hongchen: I think this was the perfect example of flooding H2 2026 arguments. With some some optical bears claiming 60-70M capacity... But this turned out to completely wrong... Their actual statements were "70/100 mW products are entering small-volume production". 7. Dingxin Optoelectronics - Targeting 15M/year blended (with 70/100mW CW and 100G EML lines) Obviously mapped many others like Everbright/Accelink and did some guesses around laser mixes, but only included public disclosures. From your pluggable vendor channel checks: - 70mW/100mW lasers are actually a bottleneck right now per Innolight/Cambridge channel checks, laser ASPs actually increasing. Lasers are tighter than they were a few months ago. I don't think there's a giant moat here, Chinese players are already competitive. But a bottleneck is a bottleneck, and anyone with capacity to monetize that will benefit, since it's a volume game. In terms of what the larger pluggable makers are actually doing: - Innolight September disclosure: actively introducing new suppliers and are planning to sign 2-3 year-long contracts to lock upstream capacity for lasers (still actively securing supply for 1.6T pluggables) So there's some game theory over who can lock up qualified capacity among all your players. Even if there's some over-ordering, laser BOM is cheap, so they'd probably want to lock up capacity with more suppliers than lose billions in downstream revenue. (also kinda hurts competitors) - High end lines (for CPO), non-competitive with Western players like $LITE / $COHR as of next few years. But Chinese players would eventually develop the technology. - $AAOI CEO: Chinese suppliers several years behind on high-power CPO/DWDM laser production "not in the next 2,3 years" - $LITE CEO questioned whether claimed Chinese manufacturing capacity was translating into commercial output. "At least at the moment, we see no impact from any Chinese laser supply." This is despite Shijia, Everbright, Yuanjie and others stating 400mW capabilities and capacity expansion targets from Chinese companies. Although Western CEOs might be disputing their reliability and capability to scale these lines. I see lower end range bottleneck for pluggable will gradually ease as more capacity comes online 2028. But all evidence points against near-term overflooding. The 100mW range for example, someone cited 2 years of equipment investment. Higher ranges were 3 years for equipment investment? So even some Chinese players take years for capacity to come online. The multi year laser shortage statements from laser company executives seems to be true... especially among higher end ranges, since buildout takes a lot of time. Legitimate competition coming from China, but as of now there's a scramble for CW LTAs among the industry in 2026-2027. Lot of capacity is probably allocated toward higher spec lasers or EML, as seen with EML bottlenecking $LITE for the longest time (they have more supply now) that they had to buy CW off the market instead of supplying it themselves. This is while tail end for 800G demand for example, might continue much much longer than expected with sovereign DC buildouts. So there might be some surprising dynamics for duration, we'll see. In the end I do think supply chains will be bifurcated: - Chinese players will prioritize domestic capabilities but heavily sources globally. - Western players (now) prioritize Western supply chains unless China comes online with cheap enough supply (which don't see happening near-term). TLDR: -> Multi-year shortage definitely seems accurate for higher end specs -> Lot of China capacity overflooding claims earlier from H1 turned out to be completely false. People keep making them for some reason across memory to photonics. -> Chinese laser players are competitive for 70mW/100MW, meaningful expansion Y/Y, but nothing showing overflooding, given laser demand increasing, probably gradual easing into 2028. We'll see, supply chain evolves month after month, just my current opinion from what I'm seeing.