Lumentum's LITE Business Gains Momentum Amidst Hyperscaler Transition to Higher-Bandwidth Optical Tech
Lumentum's LITE business is gaining momentum as hyperscalers transition to higher-bandwidth optical technology. The company has begun shipping 1.6T transceivers, and its cloud transceiver shipments remain at 800G. However, the bulk of its sales are expected to shift to 1.6T in the first quarter of fiscal 2027.
Lumentum believes that improved design engineering has helped it reach the market ahead of larger competitors like Cisco $CSCO and NVIDIA NVDA. This positioning is expected to strengthen Lumentum's Systems business through rising demand for higher-value cloud transceivers.
The transition to 1.6T technology is driven by the increasing bandwidth requirements of custom AI clusters. Tier-1 hyperscalers are rapidly shifting from 800G to 1.6T, and Lumentum expects continued momentum in its Systems business in the first quarter of fiscal 2027.
The company's laser portfolio is also benefiting from the transition to 1.6T technology. Its 200G-per-lane Electro-absorption Modulated Laser (EML) products already account for more than 25% of EML revenues, and Lumentum expects this figure to rise to 50% or more by mid-2027.
To capture rising demand, Lumentum is expanding capacity across its two indium-phosphide wafer fabs in Japan. The company also plans to qualify EML and CW processes on new tools to meet growing demand for both 200G and emerging 300G lane-speed opportunities.