AI Data Center Buildout Keeps Optical Parts in Short Supply Through 2029
Lumentum said demand for certain AI optical and laser components is outpacing its production capacity, with some orders effectively committed into early 2029. The CEO's comments sent Lumentum shares up about 6% and lifted other optical communications stocks, including Coherent, Applied Optoelectronics, Corning and Ciena. The company cannot meet roughly 70% of customer demand for some products next year, underscoring how AI data-center expansion is straining manufacturing.
Lumentum's CEO said some optical and laser products are effectively booked into early 2029, longer than guidance six months prior. For some items, about 70% of next year's customer demand cannot be met; other shortfalls run through 2028. AI data centers need light-based links to move data among processors, servers, and sites.
The company has raised output at its Tokyo-area plant twelvefold in two years and plans more capacity in Japan, England, and the U.S. It committed at least $350 million in Japan, with cloud customers sharing some expansion risk. A Greensboro, North Carolina, site should begin contributing revenue in early 2028.
Prolonged optical shortages may affect how quickly AI services reach consumers and businesses, as data-center operators could face delays or higher costs. Investors in Lumentum and peers may see continued volatility tied to capacity news. Workers and regions hosting new plants, such as Japan, England, North Carolina, may gain manufacturing jobs, though timelines could slip. Broader users of cloud and AI tools might experience uneven performance or pricing if network buildouts lag.