The overall optical components market exceeded expectations, with customers accelerating the transition from 400G to 800G, driven by AI cluster interconnected solutions and hyperscaler networking investments. Coherent saw estimated demand growth increase by 8% QoQ and 25% YoY, while Lumentum experienced 5% to 7% QoQ growth, both bolstered by cloud and AI demand growing 25% to 35% YoY. Average selling prices for 800G AI optic modules increased 10% YoY and 2.5% to 5% QoQ due to product mix and tight supply, with 1.6T components moving into initial procurement and a commercial ramp expected by 2027.
Hyperscaler demand for 800G optical components is driving price increases and accelerating the transition to 1.6T, tightening high-speed networking supply.