Optical components + lasers (Coherent) - 800G/1.6T transceivers for AI data-center interconnect, on its own indium phosphide fabs
AI exposure 54% — derived from reported segment revenue, not asserted.
Connectivity → Optical Components & Photonics · figures rebased to Q4 FY2026, reported 2026-08-12
Datacenter and communications optics — transceivers, co-packaged optics, optical circuit switches and the laser chips inside them — are 74.1% of revenue, so Optical Components & Photonics is effectively the whole company. Industrial lasers and optics at 16.0% are tagged in Lasers, Directed Energy & Photonics, and the engineered-materials and silicon-carbide-substrate leg at 9.9% in Critical Minerals & Base Metals, where AXT sits for the identical business: Coherent produces the substrate material rather than designing chips on it, which is why that leg moved out of Semiconductor Devices. Rebased 2026-09 to the FY2026 10-K — the segments had been carried as 79/21 against a reported 74.1/25.9.
Also tagged: emerging in Frontier & Emerging Bets → Lasers, Directed Energy & Photonics; emerging in Energy Supply & Critical Minerals → Critical Minerals & Base Metals.
Coherent retired its Networking / Materials / Lasers segments effective July 1, 2025 and now reports two: Datacenter & Communications and Industrial. Rebased to the FY2026 10-K (year ended June 30, 2026): Datacenter & Communications $5,274.6M = 74.1%, up 40%, and Industrial $1,843.6M = 25.9%, down 10% — the Atlas had 79/21, understating the industrial half by five points and overstating Coherent's AI exposure with it. Inside Industrial, the engineered-materials and silicon-carbide-substrate leg is about 9.9% of revenue: Coherent produces the material, which is what Critical Minerals & Base…
Moat. Vertically integrated optics, and the integration that matters is indium phosphide: Coherent runs its own InP wafer fabs and is doubling internal output by the end of calendar 2026, a quarter ahead of plan, while Lumentum and Fabrinet buy from outside. Six-inch InP yields more than four times the devices at less than half the cost of three-inch. NVIDIA's $2B equity stake and multi-year co-packaged-optics supply agreement tie that capacity to the dominant roadmap.
Bottleneck / pricing power. Rising pricing power in datacom transceivers, and FY2026 proved it: non-GAAP gross margin reached 40.2% in Q4, up 215bps YoY, and full-year non-GAAP operating margin expanded 262bps to 20.5% - margin widening through a demand surge is not what a price-taker does. Growth is supply-led rather than demand-led, and 1.6T carries a better margin than 800G.
Role in the AI stack. The optical-interconnect (transceiver/laser) layer for AI clusters.
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