The components may lead transceivers for two reasons. One is you are earlier in supply chains in general, so you’re shipping a quarter or two ahead ultimately of when transceivers are shipping. But secondly, the nature of who the customers are maybe the most early leading adopters maybe folks that built transceivers themselves and need components. And I think as Alan alluded to, all these timelines are clearly dependent on whether it be DSPs, switching silicon, processor silicon, things that are beyond our control, we are closely monitoring, we are unaware of anything that impacts the timelines that we’re outlining here based on those other elements becoming available either late this calendar year or the beginning of calendar ’25.
Kathy Ta: Thanks, Tom.
Operator: Thank you for your question. The next question comes from the line of Karl Ackerman with BNP Paribas. Your line is now open.
Karl Ackerman: Yes, thank you. I have a clarification question and a follow-up. For the clarification question, does the $40 million headwind from telco reflect any broadening impact from the chip supply band beyond the initial telecom products you outlined last quarter?
Alan Lowe: Chip supply.
Chris Coldren: Are you referring to restrictions on customers declining…
Karl Ackerman: That is correct.
Alan Lowe: Somewhat. As of today, we’re not shipping to that large customer and there were some shipments in the March quarter. So that has some impact, but not a meaningfully large impact relative quarter to quarter. Now year-over-year, major impact of the U.S. restrictions on our ability to sell to that customer.
Karl Ackerman: Yeah. Okay, understood. And then, you spoke about some updated views on the timing of EML shipment. Would you have any update on the timing of 100-gig VCSEL? I think last quarter you indicated that you would start production in the second half of 2024. I’m just curious if there’s any update on that. Thank you.
Alan Lowe: Yes. We’re making continued progress on our 100-gig VCSEL. Now with having Cloud Light be part of the Lumentum team, we have an in-house way of getting our VCSELs tested in transceivers and hopefully qualified in, as you said, in the second half of the calendar year in these multimode transceivers. So, continued progress, but I’d say we’re still on track for really the end second half of the calendar year for 100-gig VCSELs and VCSEL arrays.
Kathy Ta: Thanks, Karl. Victoria, I think we have time for just one more question.
Operator: Of course. Our next question comes from the line of Tim Savageaux with Northland Capital Markets. Your line is now open.
Tim Savageaux: Great. Snuck in there. I want to compare your 1.6 terabit opportunity or at least ask a question about. For 800 gig, we seem to have seen the very short reach kind of within the rack connectivity market developed first, and then, broader market maybe for switch to switch transceivers inside the data center appears to be developing now. As you look at the 1.6 opportunity, I guess, is there any reason that would develop differently? It seems like most of what you’re targeting are traditional transceivers versus short reach cables or what have you. But I’d just be interested in your perspective on comparing and contrasting what we’ve seen at 800 and what you expect at 1.6 terabit. Thanks.
Chris Coldren: Yeah, Tim. It’s a little bit of nuance, but I would say that something we highlighted at the OFC presentation and point investors, there’s a little more detail in that slide deck that we had shared. But the key point is that as you go to higher speeds, the distances you can go decrease very rapidly. So, we do anticipate as we move to 1.6T and beyond that you’ll see more single mode in the mix than you’ve seen historically. Maybe these are simpler single mode, the [DR-type spec] (ph) transceivers, whether they’re using silicon photonics or EMLs. And so, therefore, a lot more single mode, where maybe perhaps there would have been multimode historically. It doesn’t mean multimode is going away. It just means that we will see more single mode in those sockets and, therefore, right out of the gate.
Kathy Ta: Tim, did you have a follow-up?
Tim Savageaux: Great. And if I — sure. I do. And I don’t want to misinterpret this. Alan, did you say you’re targeting 50% share of this 1.6 terabit market to kind of get where you need to be or was that 50% comment around something else?
Alan Lowe: No, that was a comment around — we don’t need to hit on all of the sockets. And any given socket, we’re not going to get 100% of. So, I’m just — I was indicating that we have a lot of qualification work and customer interaction going on today in order to achieve what we talked about at $500 million exiting calendar 2025, we don’t need to be successful in all of those slots that we’re engaged with today. Now, if we’re more successful than half of them, then it will be more revenue than that. And I think that will come down to us executing better than our competitors and having a value proposition that makes it compelling for our customers to buy more from us.
Tim Savageaux: Okay. Thanks very much.
Kathy Ta: Thank you, Tim.
Operator: Thank you for your question. There are no additional questions waiting at this time. I would now like to pass the conference back to Alan Lowe for any closing remarks.
Alan Lowe: Great. Thank you, Victoria. I would like to leave you with a few thoughts as we wrap up this call. Our agility and leadership position gives us confidence in navigating the current market environment. Lumentum stands at the forefront of the data center revolution, pioneering advancements in chip scale photonics, automated manufacturing, and partnerships with hyperscale cloud customers. To capitalize on these compelling cloud opportunities, we are rapidly deploying both manufacturing capacity and R&D capabilities. This ensures we are well-positioned to help customers meet the escalating data rate demands of AI architectures. The Cloud Light acquisition has been a resounding success. Our combined teams has propelled our high-speed transceiver production plans forward, enabling us to meet the surging market demand, which we expect will drive our cloud revenue into a multi-billion dollar run rate in the coming years.
Thank you for joining our call today. We look forward to seeing you again at investor conferences and upcoming meetings later this quarter.
Operator: That concludes today’s call. Thank you for your participation, and enjoy the rest of your day.
