bottleneckScore 80/100Add to thesis
Coherent: indium phosphide capacity is the sole bottleneck; capex nearly doubled Q/Q to $556M
“Indian phosphide capacity continues to be our primary constraint... We remain on track to double our internal indium phosphide output capacity year-over-year by the end of the current quarter, one quarter ahead of our original plan... we produced about 80% more indium phosphide lasers in our June quarter than we did the prior year.”
Why it matters
InP laser capacity — not assembly/test — gates optical transceiver supply to AI data centers, with capex jumping from $290M to $556M sequentially and more increases guided, implying an 18-month payback.
Investment implication
Signals sustained tightness in InP EML/CW laser supply through calendar 2027, benefiting Coherent's margin expansion and potentially other InP substrate/epi suppliers; watch capex-driven capacity additions for industry oversupply risk later.