Lumentum CEO Michael Hurlston told an audience at the RAISE Summit in Paris earlier this month that indium phosphide, the compound semiconductor behind every laser in an AI data center, is heading into a supply squeeze worse than what we've already seen with DRAM / NAND, and that Nvidia's decision to fund Lumentum and its biggest competitor at the same time was a response to exactly that.In his remarks, Hurlston said that telecom customers bought lasers in the hundreds, while Nvidia and the hyperscalers are asking for hundreds of millions. While Lumentum runs five indium phosphide fabs, it's still shipping more than 30% below what customers want. Nvidia's answer, in March, was to write $2 billion checks to Lumentum and Coherent, the two suppliers that, between them, make most of the world's high-speed datacom lasers, with purchase commitments and future capacity access attached to both.
Lumentum CEO warns of impending bottleneck on critical material used for silicon photonics — fab and material shortfall already lags 30% below customer needs as co-packaged optics demand skyrockets
Nvidia put $2 billion each into Lumentum and Coherent. Between them, they hold most of the world's indium phosphide capacity.
TL;DRAI
Indium phosphide supply trails 30% behind AI datacenter demand; Nvidia's $2B dual backing to Lumentum and Coherent flags scarcity. Hyperscalers shift capex to locked capacity deals, reshaping silicon photonics vendor leverage and procurement strategy.
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