Sumitomo Electric Industries (5802.T): 1H/DC-related briefing: Steady optical device output in 2H; wide capacity boosts, progress in CPO

Goldman Sachs hosted takeaways from Sumitomo Electric Industries' 1H results briefing held at 15:00 on November 12, which covered 1H3/27 earnings, the full-year outlook and the growth strategy for its data center-related business. On the optical device production troubles that raised concern after 2Q results, the company said stable production is possible in 2H; optical devices carry a high contribution margin and earnings should accelerate from 2H, with further capacity expansion beyond existing plans slated given strong demand. SEI raised its server purchase value growth outlook for FY3/26-FY3/30 to +47% CAGR from +13%, based on Gartner research, and is broadening its customer base beyond hyperscalers toward modularization leaders despite supply constraints. In optical connectors, SEI has been selected by NVIDIA as a development partner, with connector capacity up 6X from FY3/25 to FY3/27 and about 21X cumulatively by FY3/29. Optical fiber capacity is set to double, and submarine fib