ECOC Follow-Up: Company Specific Takeaways / Investor Feedback

This is a follow-up to our ECOC First Take note, summarizing takeaways from individual company meetings at ECOC (held in Spain on 9/21 and 9/22) with CSCO, CIEN, COHR, KEYS, NOK, TSEM (NC) and Lightmatter (private), alongside post-conference investor feedback. Strong demand environment, growing TAM from optics in scale-up, supply constraints clear. The themes of the conference were: optical content is growing faster than suppliers can produce it, many vendors are sold out for 12-18 months, and the exact form CPO/NPO will take is still up for grabs, though recognition that it will happen is growing. We see LITE/COHR having the nearest term catalysts (CPO/NPO announcements, strong demand across InP supply chain, yield improvements helping gross margins), with more opportunity for CIEN/GLW/CSCO slightly further out as supply loosens and higher margin products flow through. More so than demand, we see gross margin upside as a bigger driver of outperformance in the coming year. Industry Vie