Good news for the optical communication industry chain recently Previously, I mentioned that I think the technical correction for optics is nearing its end. Today, Tower Semiconductor announced the expansion of its 300mm silicon photonics (SiPh) and advanced packaging capacity. Meanwhile, AAOI officially kicked off the construction of a new 400,000-square-foot factory to scale up production of 800G and 1.6T optical modules. Innolight shared in its latest investor meeting that the demand for 800G optical modules is stronger than previously expected, and the demand for 1.6T hasn’t weakened either. Their customer base has expanded from Hyperscalers to Neocloud and AI model companies. Judging from the continuous capacity expansion by leading companies, what I see is the industry chain’s confidence in the demand for AI optical communication over the next few years. If companies believed that the demand for 800G and 1.6T would peak soon or were worried about a slowdown in AI data center investments, the logical business move would be to slow down expansion and control expenses, not to continue building new capacity. On the contrary, whether it’s Innolight, Tower Semiconductor, or AAOI, the signals they’ve been sending recently indicate they’re preparing in advance for future demand. These expansion plans don’t guarantee there won’t be fluctuations in the future, but at the very least, they show that the orders and demand seen within the industry chain still support their continued investment. Next, the market will continue to validate this logic. Key events to watch: Nokia’s earnings report on July 23, AAOI and AXTI’s earnings reports at the end of July, and the outlooks from optical communication leaders like Lumentum and Coherent in August. If the orders, demand, and guidance from these companies align, the demand logic for the entire optical communication industry will be further confirmed. #OpticalCommunication #AI #800G #1.6T #SiPh #Investing