FCC optical transceiver rules likely target 3.2T modules — lasers win, not transceivers 🔥
Morgan Stanley met with DC officials. Key takeaways:
• Restrictions likely start at 3.2T modules made in China (800G/1.6T untouched for now)
• Chinese modules can still qualify if 65% of bill of materials is U.S. content — most already near that threshold using U.S. DSPs + lasers
• MS analysts expect positive impact on laser pricing to matter MORE than any transceiver market share shuffle
• InP substrate supply = the real bottleneck to watch for hyperscaler AI buildouts
Winners:
$AXTI — InP substrate supply
$SMTC — TIAs/drivers
$MXL — DSPs
$AAOI — large beneficiary
$SIVE — high alpha play for lasers, "tremendous capacity" coming online at U.S. foundries (likely process of elimination from CIOE checks)
$LITE / $COHR — obvious laser beneficiaries
Bottom line: Western supply chains for lasers, DSPs, TIAs already bottlenecked. Qualified capacity just became even more valuable. This won't slow AI buildouts — it'll just tighten pricing for U.S. component suppliers.
Morgan Stanley met with DC officials. Key takeaways:
• Restrictions likely start at 3.2T modules made in China (800G/1.6T untouched for now)
• Chinese modules can still qualify if 65% of bill of materials is U.S. content — most already near that threshold using U.S. DSPs + lasers
• MS analysts expect positive impact on laser pricing to matter MORE than any transceiver market share shuffle
• InP substrate supply = the real bottleneck to watch for hyperscaler AI buildouts
Winners:
$AXTI — InP substrate supply
$SMTC — TIAs/drivers
$MXL — DSPs
$AAOI — large beneficiary
$SIVE — high alpha play for lasers, "tremendous capacity" coming online at U.S. foundries (likely process of elimination from CIOE checks)
$LITE / $COHR — obvious laser beneficiaries
Bottom line: Western supply chains for lasers, DSPs, TIAs already bottlenecked. Qualified capacity just became even more valuable. This won't slow AI buildouts — it'll just tighten pricing for U.S. component suppliers.