Lee Xu: You also mentioned if there is any key technical hurdles that we won’t be able to overcome. So far, no. We – our development has been going on track and we are confident that we’ll be able to release the product on time.
Chuck Mattera: This evolution of the market is going to play right into the strengths of Coherent, and we will continue to invest, innovate and to use our imagination across both the laser and the transceiver to deliver disruptive capabilities to a customer. The optical circuit switch is just one example, not a laser-based. The optical circuit switch is just another example of the kind of innovation power in the company and the ability of the company to begin to catalyze new markets that may have billions of dollars’ worth of opportunity for us. So thank you for your question, Ananda.
Ananda Baruah: Thanks, guys. Appreciate it. I’ll leave it there. Thanks.
Chuck Mattera: Thanks.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Dave Kang from B. Riley. Your line is open.
Dave Kang: Thank you. Good morning. Regarding that OCS, just wondering if I could get any update, how big is it right now? Any new customer wins and who are your main competitors?
Chuck Mattera: Okay. Thank you, Dave. Good morning. Julie, do you want to take that?
Julie Sheridan Eng: Sure. Yes, Dave, thanks for the question. So yes, as Chuck was just saying that optical circuits switch, I think is a great example of the power of innovation of our company. I’m sure you saw our demo and release at OFC where we’re using our liquid crystal technology. So it’s a great example where we have a technology inside the company that we have a long history of. We ship into the undersea market. So it’s very, very reliable. And we saw a market opportunity where we could use that same technology for a different market need in the optical circuit switch. So I was really proud of our team who delivered a great demo for OFC. It is new incremental revenue for us. We think our liquid crystal is a great solution.
It operates at a lower voltage than MEMS and so that leads to higher reliability, but also lower power, which is very, very important in the data center. We’re engaged with many multiple customers and we see shipping samples all within the next few months. And I think we called out in our shareholder letter that we could see revenue on that product by our fiscal year ’26. And yes, we just feel like we have a really strong position there. So I’m excited about it.
Chuck Mattera: Thanks, Julie.
Dave Kang: Thank you. And my follow-up is on 800 gig. You mentioned that orders were down sequentially from very strong fiscal 2Q. Just wondering what to expect during this quarter?
Chuck Mattera: Magnus, do you want to take that?
Magnus Bengtsson: Sure, I can take that. Thanks for the question, Dave. So as we noted in the shareholder letters, lead times have come down and so customer ordering patterns have more normalized to be within lead-time, whereas a couple of quarters ago, they ordered many quarters out. So I think we’re back to a more normal order pattern.
Dave Kang: Thank you.
Chuck Mattera: Thank you, Dave.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Jim Ricchiuti from Needham & Company. Your line is open.
Jim Ricchiuti: Hi, thank you. Good morning. What drove that 30% increase in laser bookings? I’m assuming the ELA display business was a big driver. Can you say what the bookings, how it performed excluding display?
Chuck Mattera: Yes. Thank you. Good morning, Jim. Magnus, take it.
Magnus Bengtsson: Yes. So yes, I’ll have to do the math, but you’re right, the orders in the quarter, we saw a good uptick in display orders. And I think that drove the lion’s share of the uptick. We saw orders from capacity increase in China and we actually expect similar order performance in the display market in the current quarter in Q4. So most of that uptick was display.
Jim Ricchiuti: Got it. Thank you.
Chuck Mattera: Manufacturing – precision manufacturing right behind it. Display number one.
Magnus Bengtsson: Yes, display number one. Precision manufacturing also saw an increase and I think that will see a further increase in Q4, and then in the semi vertical, mostly flat.
Chuck Mattera: Thank you, Magnus. Please go ahead, Jim.
Jim Ricchiuti: Yes, that actually ties into with the next question on precision manufacturing. What’s driving that? Is it a case of easy comparisons or are you guys seeing a turn in this part of the business?
Magnus Bengtsson: I think what we’re excited about in the business is what we’re doing in the welding space targeted towards EV applications, where we have broad customer engagements and we’re seeing increasing depth in terms of customer engagements. I would – we’ve seen a little bit of an uptick in China in the broader market in China, but we haven’t yet seen the broader market turn. For the rest of that space, as you know, it’s pretty macro-dependent. And we haven’t really seen that change in broad way. So there are some pockets of upside rather than a broad comeback in precision manufacturing.
Jim Ricchiuti: Thank you.
Chuck Mattera: Thanks Magnus. Thank you, Jim.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Tim Savageaux from Northland Capital Markets. Your line is open.
Tim Savageaux: Hi, good morning. I want to come back to the order and backlog discussion. And I guess the commentary was about more normalized, but you’ve seen orders come down, I think three quarters in a row now and I think the book-to-bill was under –below one in the quarter. And you did see a big surge of orders last year, driven by networking in Q4. It sounds like you don’t expect to see that again as lead times normalize. But what should we expect for the direction of overall orders and backlog for the company heading into fiscal Q4 here?
Chuck Mattera: Yes. Rich, just in general, Rich?
