Morning, everybody. For those of you who don't know me, my name is Darlene Pasquill, and I run the Americas Equity Division at Mizuho. On behalf of myself and others on Mizuho's leadership team, Jerry Rizzieri, our President and CEO, and Head of the Corporate Investment Bank, as well as Michal Katz, both of whom I'm sure will be wandering around shortly. Michal runs our Investment and Corporate Banking. It's a pleasure from us to welcome you to New York City and to the Conrad Hotel. It's an electric time to be in New York City. For those of you who might have had the experience of being near Penn Station last night, it was certainly very electric. It was a great night to be out. We're looking for a better outcome on Wednesday night. Many of you have traveled across the country and across the world to be here, and we're genuinely grateful for your time and for the trust you have in us. It means everything to me and to the franchise. We're convening here at a remarkable moment in time. Technology's always been a driver of change. What we're witnessing today with artificial intelligence feels different in kind. AI is reshaping how we live, actually. How businesses operate, how consumers engage in the world, and how capital flows towards opportunities. Last week at Mizuho, we did a two-day mandatory offsite for the leadership team and many of our members of our management teams under us. Importantly, we focused on AI and how we want to continue to adopt it. For a global institution like Mizuho, technology sits at the center of everything that we do. Our CIO, John Buchanan, who also will be here, and our IT teams are essential partners as we invest in our capabilities to remain at the forefront of this transformation. This conference wouldn't be possible without the exceptional work of our organizing team. My sincere thanks goes to our Research and Sales Leadership under Bill Featherston and Shaival Patel, respectively. A big thank you to Jessica Mays and her Corporate Access Team. Also to Melissa Mendel and Hannah Zeitlin, who are in the audience as well, who have a tremendous partnership with Equities and Investment Banking, who helped shape what we will deliver to you today. Over the next two days, we will have almost 500 investors who will engage with us in one-on-one meetings, keynote addresses, fireside chats, and also thematic panels. We've designed this agenda to add value, to deepen how you think about technology, and sharpen your conviction in your investments, and strengthen relationships. We also invite you to join us this evening at 5:00 P.M. We have drinks on the main floor. Please do stay if you have the time. It's great networking. Now to get this underway, I'm pleased to turn the microphone over to Vijay Rakesh, who's our Managing Director and our Senior Semiconductor and Quantum Computing Research Analyst, who will introduce our keynote speaker, Michael Hurlston, CEO of Lumentum. With that, welcome Vijay and Michael to the stage. Thanks. Thanks, Darlene. Thank you, everybody, for joining us today at the Mizuho 2026 Global Tech Conference. Thank you, Michael, for joining us. Obviously, big year for you. Just want to give a quick preamble. Lumentum obviously is the key driver for the AI data center industry today. You are spearheading the whole photonics transformation in the data center, and as you look at the optical networking side, that's one of the biggest transformations in the data center industry today. As you look at where Lumentum sits, you are supplying some of the key lasers and the optical engines for this entire data center transformation globally. As they say, electrons do the work, photons steal the show. Right? I have a couple of other catchy ones too for you. As they say in Lumentum, the future moves at the speed of light. Right? With that, I have the distinct pleasure of introducing CEO of Lumentum, Michael Hurlston. Please join me in welcoming. Thank you. Obviously, as you look at Lumentum, it's been a massive year. Your market cap last year at this time was about $7 billion. Now you're $70 billion. You've grown 10x. It's been just an incredible run. Did you see that? That's a tough one, Vijay. That's a tough one. That's an easy one. No, I didn't see this. I think it's unusual. CEOs, as you likely know, have two outcomes in life. They're either fired, or they retire. I was lucky enough to join the company as a sitting CEO, which almost never happens, and I think when the board showed the forecast to me, I said, "Hmm, I'll de-rate that by about 50%. Yeah. I should've multiplied it by about eight, so It's well deserved. I think you guys have almost quadrupled or went up 5x since we initiated on you guys back in November, December. Well done. As you look at Lumentum, you are growing 80, 90% on the top line. That's massive growth. That's what you have grown in the last couple of years. You have laid out a massive fiscal 2028, June, somewhere with the $8 billion top line. You're running somewhere in the $5, $6 billion here. You have laid out a massive TAM of $90 billion. You're just $8 billion now. It's almost like there's so much growth ahead of you. Maybe you can start off talking about how you see the big vectors of growth for you in photonics in the data center, whether it's scale out, scale up, OCS, and then we can probably parse through all of them, so Look, Darlene was talking about in her opening remarks that we're in the middle of an exciting time, and she's absolutely right. It's an AI super cycle. Within that AI super cycle. As you're saying, it's a photonic super cycle. We've never seen anything like this in the optics industry. I think the highest revenue quarter that Lumentum had in its history was about $500 million, and we're poised to go over $1 billion this quarter, so double the highest quarter ever. I think there's so much runway ahead, as you're pointing to. The growth drivers for the company are vast and varied, and really none of them are hitting yet. Really the best is yet to come in terms of optical scale up, optical scale out, our optical circuit switches, none of which really you see in the numbers yet. I think we've got a lot of runway. You initiated coverage on us, and we were very pleased with that. We've gone up, but I think we've got a lot of runway and a lot of gas in the tank from here. Yep. Absolutely. As you mentioned, there is so much ahead of you. Right now, if I were to take a couple of the segments there, especially on scale out, what you supply is one of the, what's called externally-modulated lasers, EML. It's a mouthful, but I'll try. You obviously dominate that market. As you go from 800G today to 1.6T next year to 3.2T, that content goes up massively. You dominate that market globally. You supply to many of the other peers in that market. Maybe talk to us about how you see that growth. How do you see that picking up? How do you see the capacity that you're adding in those areas? Yeah. Look, super question, Vijay. If you look at our scale-out business, there's two components to it. There's actually probably three components. There's the EMLs that we supply to everybody else, and right now the majority of those EMLs are 100G per lane, meaning it's 800G transceivers that are getting manufactured based on those EMLs. We see a transition now to 1.6T led by NVIDIA and Google. Yeah. They've taken the lead on 1.6T, now we're supplying 200G EMLs to that market. That ASP is roughly double, so it's a huge tailwind for us as we start working through that transition. That's the first thing. The second thing is, of course, in the scale out, we supply transceivers. Yeah. You and I have spoken a number of times about the transceiver business, probably not our best business, but all of a sudden, it's a business that's growing really well. Right. We have one main customer that's done very well in the market. They're picking up a ton of share, and they're deploying 1.6T right now. We have done very well with them. We have a second customer that's been really a positive surprise for us. Our scale out transceiver business is doing quite well. The third thing is the scale out as it relates to the CPO switches. Yeah. We have a business there that's very unique, a high-powered laser that we supply to NVIDIA. That partnership has been announced and discussed. They obviously invested some money in the company. That scale-out business has been surprisingly strong. We've talked about in the fourth quarter of this year, seeing somewhere between $50 million and $100 million incremental revenue coming from our scale-out CPO. Yeah. Sort of the sum total of that scale-out business leads to a lot of optimism. All three things are beginning to hit. You don't see anything from us yet in scale-out CPO. You don't see a lot from us yet in the 1.6T transceiver. Those two things are going to layer on to a base business that's already pretty strong. Yeah. Well said. I think just to put that in perspective, most of the interconnect market today is copper, but you are starting to see that transition to optical. You are benefiting not just from the number of data centers coming on, but even as bandwidth goes up, that content goes up double, ASP goes up double. You have two big tailwinds there from both unit and ASP going up. Plus just increasing penetration within that. If you look at the scale out side, how do you see what actually drives the dominant position there? How do you differentiate? What gets you the leadership there? You pretty much own that space. You supply pretty much every other supplier of EML. You supply the lasers there. Yeah. It starts with our laser business. If you think about lasers, it's really interesting. It's not as a Broadcom or an NVIDIA would talk about where you have a process coming from TSMC, a manufacturing process, and then you have a design, and the two things are actually somewhat divorced from each other. You run a design, you run that separately, in some cases, to the process. With lasers, that's not the case. The two things are totally intermingled. You have a process and you have a design, and the two things sort of work hand in hand, and there's a lot of iteration that goes into that. Our laser design really separates us out. We have lasers, particularly at higher power levels that other people simply can't get to with the reliability and with the performance, and that makes us very difficult to compete with. EMLs are also very difficult to make. They are an area where we're able to differentiate because the EMLs we deliver, very high quality, and our customers report the transceivers that they're able to build using our EML lasers yield much higher. We really have a big differentiator, I think a moat with that laser business. Got it. You're growing at a pretty envious 80%, 90% top line, but that's just scale out. You have a scale-up market ahead of you that's arguably 5 to 10x the size of the scale-out market. Talk to when you see that starting to come together, because that is going to turbocharge your growth. That's just coming on second half of next year. You can talk to what you're seeing there, what are the trends there, and how you can differentiate. Yeah. You're absolutely right. You said a minute ago that we're in this cycle where you see copper replacement. This is really where it is. It's in scale-up. Yeah. Right? Scale-up is where we see an opportunity for the optical industry, and arguably we're the leader in the optical industry, to take our technology and put it in racks and in clusters. Everything we've talked about so far, when you talk about scale-out, you're going from a cluster of compute out to what we call a scale-out switches. This is something completely new, where we're going inside the cluster, and we have connections that run either cross-rack between racks, or now in many cases, we're seeing inside the rack itself with an emerging NPO opportunity, near packaged optics, that you and I haven't talked about. The sum total of that, the magnitude is far greater than scale-out, even in the first instantiation, which we would expect for us to start shipping in the second half of 2027. Yeah. For you to see scale-up optical products on the market in the first part of 2028. It's very soon. We're working together now very much with customers who are designing their CPO systems, scale-up CPO systems, and now NPO, the near packaged optics, which again, you and I haven't spent a lot of time on, but we see that as even a bigger opportunity for us here in the near term. Got it. I want to go quickly to the CPO side, since we almost got to that topic. Obviously, when you're looking at CPO, you have one big customer there. There's NVIDIA, there's Google, which pretty much dominate that landscape. You are a sole supplier to one of the leaders there, I think obviously you're supplying to NVIDIA. Maybe you can talk to what you're seeing in CPO, what are the risks there, and how you see that pipeline coming together as well. Yeah. I think CPO is technically quite difficult, right? There's a lot that goes into it, and we've had to shape our technology through multiple years to get this to work to a degree that NVIDIA can get things to yield, and they can effectively ship a co-packaged solution. Co-packaged means that there's a substrate, right? Their device sits on that, in this case, let's say a switch chip. Then the photonic solution is right there on the substrate. In some of these instantiations, you have an External Light Source, so there's actually little fiber runs that go out to what looks like a pluggable, similar to what we'd see in transceivers, that actually sits on the faceplate. That's how I think NVIDIA is thinking about their co-packaged optic solution. There's a lot that goes into that. We think that they've really worked out a lot of the technical kinks on scale-out, and now they can move it into a scale-up situation, which we're super excited about. Got it. I think, as you mentioned, one of the reasons why people are going to co-packaged optics is to maybe reduce the latency, reduce the number of components, reduce the power consumption, which all makes this whole thing turn a whole lot faster, I guess. Maybe outside of the big leader there, are you seeing interest in CPO coming from other customers as well? Are you seeing other big ASIC guys also jumping on the CPO bandwagon? It's going to be a massive trend in terms of how this industry transforms from all the different cabling and all that to little CPO packages that's doing the whole connectivity. Yeah. We certainly see some CPO, what I think is important to understand is there's a second technology that's being discussed, which is near-packaged optics. Near-packaged optics means now I have that substrate with the same chip. Yeah Semiconductor solution, and then just off it, outside the substrate, you put what we call an optical engine. That optical engine may have the laser in it, so different to this faceplate idea that we just discussed with the ELS, or it may actually employ an ELS. What we've seen probably in the last two months, really since our last earnings, is a market shift in interest from others, non-NVIDIA class customers, around NPO. They're trying to solve the same problem. At 1.6T- Yeah 200G per lane, you have some difficulty with copper. Yeah. It simply can't go over any sort of reasonable distance, even with retimed copper. You've got to start thinking about optics, and what we see now is, you saw yesterday, one major hyperscaler made an announcement with Corning. Yeah. Right? I think you talked about that. That is really indicative of how that guy is thinking about near-packaged optics, how they're thinking about employing a heavier degree of optics in the backplane. We think even though you probably have lower volumes generally. Yeah With the hyperscalers who are doing their own ASICs or with other chipset folks that are trying to compete with NVIDIA. The number of lasers that they would want to deploy, because they're going much more aggressively- Yeah To an optical back plane, the number of lasers they want to deploy is actually larger. We're looking in the face suddenly of an opportunity that's really started to snowball. Yeah, and that's Amazon and with Corning, I guess. I think NPO is not even started yet. It's more like, let's say next year, as you mentioned. CPO has been talked about, but looks like you're thinking NPO probably gets pulled in because that's maybe a little bit easier to do than CPO. How would you size that market, I guess, because it's a couple of hundred million in CPO revenues for you this year, next year. Some of your peers have talked about a $15 billion CPO market. I'm wondering, NPO could be sized something similar. How do you see that? Where do you see that fit in? Yeah. Look, what's interesting about it is from a number of racks, you're probably talking smaller, but from a number of optical lanes, it's actually bigger because they're going all in. Right? They're saying, "Look, in order for us to leapfrog, let's say NVIDIA, we're going to have to move quickly and have more 1.6T lanes going down the back plane of the rack." In that context, you're going to have to use a lot more optical engines. The size of it looks like it's frankly bigger than even the CPO opportunity that you and I have talked about. Got it. Inherent to all these scale out, scale up, and whole NPO, near-packaged optics and co-packaged optics, the heart of that is the laser. I think we always come to this point where supply is tight, we need to add capacity. I know NVIDIA put $2 billion in you guys. You're building out the Greensboro fab. With some of these new opportunities that are coming on, can you talk to how that ramp is going from 3-inch, 4-inch today to 6-inch? Obviously, looks like your customers want their supply yesterday. Right? They want to see it or line of sight to how that capacity is coming on, et cetera. Maybe you can talk to what's happening there, how comfortable you feel with the ramps, et cetera. Look, it's putting a lot of pressure on the organization. Right? For people that have been around optics- Good pressure it's good pressure. Yeah. Maybe it's like the pressure Darlene Pasquill puts on you. It's good pressure. Talk way the other day. The optical industry, if you look at it, used to think in scales of thousands. Yeah. Right? If you think about when we were serving AT&T and Verizon and these optical providers that built the internet backbone. It's really units of thousands. Now we're getting into units of hundreds of millions. It's multiple orders of magnitude in terms of how the industry, not just Lumentum, but the industry has thought about producing these things. Our fabs are definitely straining. We've gone from, again, very small number of shipments to massive numbers, and it's still not enough. We're under shipping demand by more than 30%, our estimate on EMLs and sort of this very early phase of co-packaged optics, scale out co-packaged optics. We're bringing a ton of supply online. We've just bought this fab in Greensboro, and we spent a lot of time in North Carolina, and we think that can generate $5 billion of incremental revenue. I think that's the number that Kathy has put out there, and that seems right. With all of that said, at the end of that journey, we actually feel like we're going to be further behind. As fast as we're adding supply- Yeah As fast as our competitors are adding supply, the demand is going up. You're just in the middle of this optical super cycle where the number of optical lanes is going from zero to some massive number in a short period of time to try to intersect this 1.6T transition. Yeah. As you bring on your six-inch, how much capacity does it add? Are you seeing customers start to talk to you about maybe getting better visibility, long-term agreements? How is that conversations going? Yeah, look, again, if you look at the demand on our CPO products, you would argue that 100% of the capacity, including the six-inch line in Greensboro, is spoken for. Yeah. As we now think about how do we add these new NPO opportunities, extremely challenging. We're obviously trying to squeeze as much as we can out of the fab assets that are there. We're unique in operating five fabs, and as you correctly said, we're probably far and away the leader in this laser market, both in terms of product quality, product performance, but also sheer output. Right? Yeah. When we talk about adding 10%, that's a big number. What we're trying to do right now is get the most out of these existing fab assets and then boot Greensboro up. As I said, we're still going to be significantly behind, the industry's going to have to find a path. There's just a lot of optical demand and simply not enough supply. Beyond the indium phosphide capacity that you're adding, is there a constraint in the supply chain on the substrate side? You get a lot of your substrates from the U.K. and Japan, JX and IQE, can you talk to, is there a supply constraint there? Are you qualifying more suppliers? Yeah. No. Again, it's the question that we get a lot, I think you asked it of us after the earnings call. We're uncomfortably comfortable right now with our substrate position. For sure. Again, with our numbers escalating like this, we are going to have tension in the system. It's just unavoidable. When we talked after the last earnings call, we felt like we were well covered with our primary supplier. We'd done a long-term agreement with them. Yeah. We felt like, okay, we're pretty well covered. Numbers have gone up considerably since then. I'd say, no, we're not well covered anymore. We're going to have to find alternate sources of supply. One of the issues right now is the substrates are controlled by the Chinese government. Outside of a couple of Japanese suppliers, their preponderance of supply is coming from China. The Chinese seem to be adding supply faster than the Japanese. You have to now find a workaround. We're a little bit uniquely situated. You drew to it in your question in that we can have substrates go from China to the U.K., and in so doing work around some of the licensing and restrictions, restrictive environment. We're uniquely positioned in that way. Make no mistake, it's something we're working on. It's definitely become a little bit tighter than since the last time we chatted. Got it. As you look at that supply chain, you mentioned China. Is there a risk that there are domestic suppliers there? Obviously, one of the things that we hear is your laser, you do some secret sauce in it. The performance on the laser is just phenomenal. The question is there a competitive threat or risk from China where they can copy your? Since they have that resource, is there any IP or a moat there that protects you from some of these China suppliers? I saw it in your questions. I thought your thinking on the questions was right. Chinese supply is definitely there, even with lasers. Where, for the most part, it's pigeonholed is the CW laser. If you look at the stack up, you probably have the most difficult thing to do are these ultra-high-powered lasers that go into co-packaged optics. You have the near-packaged optics lasers. You have EMLs. At the bottom of the stack are CW lasers, which are an increasingly important part of the demand side. Yeah. We don't make many CW lasers. We've sort of skated outside of that zone because it is a bit more of a competitive environment. Yes. We definitely can see Chinese suppliers coming in there. We still think we have advantage. We still think the performance advantage we offer, the reliability we offer, the yield that we offer is there. Look, it's difficult for some of these Chinese guys who have been supplying themselves now to go into the open market. We don't think it's a fait accompli, but again, for our position, probably not as much a threat as it might be for somebody else. Got it. I guess the EML itself is growing pretty nicely. CW will grow, too, but yes. Yeah. Yeah. You and I discussed it. Our view in the transceivers now, right? The first leg, the current leg of scale-out, the majority of 1.6T shipments today are all EML. It's almost all EML. Yeah The transceivers we make, which are silicon photonics or CW laser-based. We do anticipate a shift to silicon photonics, right? Even in that shift, we believe the number of EMLs is going to go up cycle over cycle. Got it. Just one last question on the laser side before we move on, because I think we have beaten lasers up quite a bit, I guess. On the CPO side and the NPO side, you mentioned obviously NVIDIA is there. Are you seeing most of the other CSPs also start working, especially on the ASIC side, trying to incorporate a CPO, NPO roadmap? Is that a fair assumption? Yeah. I think for the same reasons that we've seen NVIDIA shift, laws of physics, right? If you are trying to transmit data at 1.6T at 200 gig per lane over any distance, copper has its challenges, right? Yeah. Doesn't mean copper goes away, certainly longer runs of copper are going to have their challenges. What we see as other ASICs are running at 200 gig SERDES and 200 gig per lane, they are going to have to deploy optics. What we see is more of this NPO coming online. It's a little easier to deploy. Some performance hit, but the laws of physics still apply as they're trying to bring on their custom TPUs. We see other ASIC guys that might be competing with NVIDIA. Yeah Really considering how do I leapfrog. Part of that leapfrog strategy is a heavy degree of optics in the back plane. Yeah. Got it. Just to tack on that, one of the things you see on the laser side is you need a single laser for every wavelength, for every channel. That drives as you need more bandwidth, you need more lasers, et cetera. Is there a way, do you see comb lasers coming in, meaning you can split the laser into multiple narrower wavelengths, you don't need additional lasers? You can use a single laser, but use a grating to split up that single laser into multiple wavelengths. Do you see that, or is that still out there? Yeah. Look, we certainly understand the way that technology works. I think the problem of it, anytime you're going to take an optic through another optic, there's going to be some inherent loss. Our view and what we actually see in some of this NPO is now deploying different wavelengths to try to pack more data. If you look at a system, if you have one wavelength per fiber, okay, that's 1x the data. If I'm able to actually get multiple different wavelengths into a single fiber, which is effectively what you would do with a comb. Another approach is, without the loss, without passing an optic through another optic, is now make a set of lasers that actually emit different frequencies. Yeah. We call this a DWDM approach, a dense wavelength division multiplexing. You're basically shooting now multiple frequencies into the fiber. Yeah. It accomplishes the same thing without the loss. What we do see, Vijay, and I thought your question, I was reading it in preparation, was a good one. What we see now is, as these NPO opportunities come online, more of them are considering a DWDM, again, to try to leapfrog more data per fiber. If they're able to do that, they think they can offer differentiation against some of these initial CPO types of products. Got it. Fantastic. I want to move to another market that you serve, which is the optical circuit switch. I don't have a timer here, guys. Oh, there you go. I see it up there. It's too far. On the optical circuit switch, that's another area where you dominate as well. I think the big player there is Google. Everybody knows it. You guys are a big supplier there. I think you have given out $400 million for next year, somewhere like that, but obviously you size that market at $4 billion, 10x that market. If you can talk through what you're seeing there, on the optical circuit switch side. You talked about multiple other CSPs also looking at it potentially. I think it might be Amazon, Microsoft, all the AWS, Microsoft, all these guys. Talk to how you see that market evolving. Look, in a backward look, the majority of our shipments actually have been to a spine switch replacement type application. We are shipping to multiple customers. We're shipping in reasonable volume to two. One of which is this spine switch replacement type of opportunity. Kathy was talking to me in the car, I think we've actually sized the TAM more like $10 billion, and we see that opportunity actually growing, not decreasing. You have this idea of Google deploying the OCS, it's an optical circuit switch, but OCS in a scale-up topology. The way they're able to deploy OCS sort of negates all this conversation we've just been having about CPO and NPO. Their architecture is very elegant, and by deploying the OCS, and it's used in this scale-up type of configuration, they have much shorter optical runs, much shorter copper runs as a result. They really don't need to deploy CPO and NPO. Yeah. What we're seeing on the OCS side is an emerging opportunity we think is the biggest yet. That is to deploy an OCS in the rack itself, one per rack, a smaller, narrower circuit switch, meaning from a height perspective. The use case here is the racks, the GPUs, have a loading problem at times. They can have a failing problem at times. If you're running these big inferencing models, which is now what everybody's talking about, if you direct traffic to a GPU that's failing, you're going to lose millions of dollars in a compute run. You just don't want that to happen. What people are considering is, look, how do we create resiliency in our racks, in our clusters, and be able to route traffic to the least loaded GPUs? An easy and elegant way to do that is with one of these OCSs. Where we've built into this massive TAM is considering a lot of these new and emerging applications outside optical scale-up- Yeah This one big use case, outside these optical circuit switches we see in the spine layer. The sum total of that leads to some pretty interesting numbers. Yeah, I think more like a failover, I guess. It's a failover, yeah, exactly. Creating resiliency, some redundancy in the system. Right. Yeah. Got it. Just a little bit of selfless promotion here. We raised our Google TPU numbers yesterday. We now see it growing more than double next year. From $4 million this year to $10 million next year and $30 million in 2028. That's a massive ramp in TPUs, and I would assume maybe Kathy will go back and do some math and figure out what those OCS implications are. Just kidding. Great. I think as you look at optical circuit switch, what you guys deliver is what's called MEMS OCS. Maybe if you can set the table on how MEMS OCS differs from some of the other modalities out there in terms of whether it's LED OCS or piezoelectric. Why did Google finally decide to go to MEMS? You're seeing other CSPs also get on the same MEMS optical circuit switch, which is what you do. That will probably continue to grow a lot faster. Yeah, look, I think that, first of all, going back to Google, they are manufacturing their own MEMS-based switch today. They designed it. They actually have some brilliant optical engineers, and they designed that optical circuit switch. They're deploying it in tremendous numbers. Certainly, there's an opportunity, we think, for us to be a third-party merchant supplier and eventually take all of that. Does it make sense for Google to manufacture OCSs? I'm not sure that's a business they want to be in. We feel like there's a really distinct opportunity. The important thing to note is their switch is MEMS-based. MEMS is sort of the de facto standard in switching. Why? Well, it's a mirror. It deploys a mirror. What you want to have first and foremost in switching is no loss. If I'm just shining light from a mirror and directing it from one port to another, there's no loss. If you have piezoelectric, you have LCOS or some of these other things, there's loss in the system. Got it. You really can't have that. That's an issue. The knock on MEMS-based solutions has been the reliability because you have a moving mirror. Yeah. Moving. It's actually a mechanical device. It has to move to move the light from one port to another. What we've said is our WSS solution, as you know, that has been in the ground for 20 years in the forming the backbone of the United States internet, that's also MEMS-based. If you have Verizon or AT&T that has to go dig up something out of the earth, that's a problem. We better have reliability built in. We think we figured out the reliability a long time ago, and that's why we're having great success with our MEMS-based approach. Is that what is being adopted by other CSPs, too? Is that primarily the reasoning for why other CSPs might be looking at MEMS rather than some of the other competing optical circuit switches? Yeah, that's right, Vijay. It's 100% about the loss. You just don't want to introduce another loss element in the system if you can avoid it. You're trying to go to optics to have speed. You don't want to introduce a lot of loss as you do that. Yeah. MEMS is the right answer. Got it. I think this probably benefits from some of the same tailwinds as the interconnect lasers, et cetera, too. Because as the rack sizes go up from 72 GPUs to 576 GPUs to 1,128 or something that you have Jensen talk about, the number of connections in the spine goes up as well. That's similar for TPUs as well, where TPUs are growing from 64 to, I think, the V8 that the short had some 1,190 TPUs in inference. I think maybe we can talk to what is happening. I think today the optical circuit switch that you supply has 64 Radix or 64 interconnections, and you're going to R300, I believe, the 300 matrix connectivity. I'm sure there's more down the road in R512 or something. Maybe how that is picking up and that obviously drives a massive jump in your dollar content, your ASPs there. All of that is feeding into the number of TPU ramps, too, I guess. Yeah. Yeah, look, I think outside all the first part of our conversation on optical scale up and optical scale out, the OCS we think is a singular opportunity for the company, where we've diverted a ton of resources to work on this, and the roadmap is vast and varied. It is exactly what you're pointing to. Our standard product today is 300 by 300, not a smaller Radix. There's 300 ports on it, and you're able to switch light to any of those 300 ports. That's our primary offering. What we see are opportunities to run the ports up, which is going to make it very difficult for a competing technology to come in. MEMS almost has to be used. The higher the port count, the more this loss principle that we just discussed works in our favor. We see port counts going up in our roadmap, and then we actually see ports going down. There, it's going to be a little more competitive, and we're going to have to think about cost. We're going to have to think about how we rearchitect a solution, still taking advantage of MEMS, but perhaps reimagining it so we can get the cost down to really get these numbers up, drop the ASP a bit, and compete in these very high volume emerging applications that we're seeing. Got it. I want to go back to the roadmaps. You've been there probably the best part of Lumentum's journey, I guess, in the last 18 months. As you look out, look forward, the roadmaps on the laser side, on CPO, on OCS, what's your vision? What gets you excited? What are you seeing as you look out? The space keeps accelerating. Every month it's a whole new landscape in terms of what people are looking at in terms of data center investments coming in, new clouds, new engagements from private equity. Maybe we can talk to how, as you sit back and look at not the last 18, which has been phenomenal, has grown 10x, how do you see the next 18? How do you see the next 24? Yeah, look, I think there's been a marked strategic shift in the company, and that strategic shift has been toward our components. I think the previous administration and frankly, optics in general sort of value systems. If you look at some of our competitors, they're systems first, right? They're really going after high-dollar content and generating boxes. They're generating platforms. We were very much in that space. We weren't particularly good at making systems, but we were very much competing in the systems arena. What we've done over the last year is pivoted the company a lot more to components. I'm much more content feeding into these system suppliers and being a strategic partner for them rather than, in some instances, competing. We just don't see ourselves as being a differentiated systems guy. We'd much rather be in components. I think if you fast-forward for five years, we want to add more components to our portfolio. We think we can compete in more than just lasers. We think there's a lot of things that go around the laser that are interesting. Photonic ICs, photodiodes, maybe laser drivers, maybe even getting in more to the semiconductor world with TIAs. There's a lot of things that we think we can do. We're now looking aggressively as to how we can increase our shoreline on the components end of the business. Got it. You mentioned briefly the administration. I think they've been very pro trying to get the AI space to ramp up, get that growth going. Are you seeing more interest from not just the administration, but also key customer CSPs to onshore some of that supply chain, to de-risk some of that supply chain, I guess? It's been a conversation. It's interesting for us if we look at the sum total. It's not just us, but you can check with Jim Anderson at Coherent. I think the sum total of products that we ship to hyperscalers is zero, to Chinese hyperscalers, right? We've been very specifically blocked out of the Chinese hyperscaler market. Meanwhile, there's a lot of sourcing of Chinese components that are going into U.S. hyperscalers. Part of the problem is between the U.S. supply chain, we couldn't supply it all. Even if you said tomorrow, "Look, let's wave a wand and kick the Chinese out of the U.S. supply chain," it would actually bring the U.S. hyperscalers to their knees because they are sourcing a ton of components. Right. In their defense, it's not like I can run out and fill that void immediately. Yeah. It has to be a concerted effort, and I think the Chinese have made a concerted effort to keep us out, and that's very disappointing, but I understand their strategy. The U.S. government and our side of the industry would have to work together in a much more concerted fashion, I think, to make that a reality in reverse and keep the Chinese out of the U.S. hyperscalers. Yeah. We've got five minutes left before I go for any questions. One last one. I think we talked about everything within the data center, on the racks, on the spine, how you're adding lasers and optical circuit switch, I guess. How about the DCI, the data center interconnect? You have the issue where you don't have all the power in one place. You have to set up all these data centers in geographically dispersed locations, and then you have to connect them optically on massive lasers interconnects between data centers. What's the opportunity there? Either it's, I don't know, you call it data center interconnect or multi-rail or maybe you can spend two minutes on that, and then we'll open up for some questions. No, look, if you look at all of these opportunities, we've been talking about $10 billion OCS opportunity, $15 billion, which is probably undercalled on CPO. NPO, we haven't sized, but again, another number. This is a smaller TAM, right? A very interesting one because we have very high market share. I think Kathy and I were doing a calculation in preparation for our chat. I think the current component piece of the DCI market or scale-across is about $1.5 billion. We see that growing to about $4 billion by 2029. There's good growth in that market driven by two things. One is, frankly, the politics of data centers, right? Where people are not looking to have these massive data centers in their backyard. The second is the power, right? Yeah. If you make a more modular data center, you don't have the power draw, at least localized on that particular grid. The sum total, of course, is going to be the same, but it's much more distributed across the entire electrical network. We see a lot more of these smaller data centers getting built out, and you have the emergence of inferencing. This agentic AI is creating a lot of need for compute, and that compute really can't be contained- Yeah To one specific area. You're going to have a lot more of these data centers working together. That is creating the scale-across opportunity. We're trying to connect data centers at full bandwidth. DCI was always connecting data centers, but not necessarily at full bandwidth. Yeah. Now with the inferencing, you got to connect at full bandwidth, full rate, and that's playing really nicely to the component sets that we provide. Our pump lasers, right, really important in multi-rail. Our narrow linewidth lasers, really important in the DCO, the modules, and then the WSS, which are going into line subsystems. There's a lot of components that we bring to our systems providers that enable this scale-across opportunity. Got it. Basically connecting all the data centers so they look like one big monolithic GPU? Correct. I see. Which again, super important for inferencing, and it creates a little bit of a friendlier political environment, if you will. Fantastic. Maybe we can take some questions from the audience. Go ahead, Jordan. Thank you, Michael, for speaking today. I had a question. Oh, that's a camera. I had a quick question. Hi Gross margins. You've done a fantastic job since you've been at Lumentum, expanding and increasing the gross margins, and investors, I think are happy to see the trajectory, and then you've outlined them getting much higher over time. One question I get from investors is the ability to sustain that, how much of that is coming from the mix of these new products, which I think you've kind of hinted to, these are generally accretive to the margins. Also, one pushback or concern as well, these laser suppliers for indium phosphide are just raising prices, and that's because there's just massive amounts of demand that exceeds supply. When the supply catches up, as you guys are all adding all this new capacity, that tailwind of benefit comes down because you guys can't sustain that. Can you address how you see the pricing playing out and then also the mix? Thanks. Thanks, Jordan. Good questions. Not that we haven't heard that one before, but I appreciate you being the straight man. Look, I come from the semiconductor business, as many of you know, and we had one of the best gross margin stories of my previous company, I think, in history. We went from mid-30s to over 60% gross margin. It was one of the biggest growths ever. We're on that trajectory now with Lumentum. We've grown gross margins by about 14%, from about 33 now to 47, 48, depending on whose number you believe, in a little over a year. That's definitely been driven by price. It's been driven by mix. It's been driven only a very small amount by cost. We haven't taken a lot of the variable cost out of the product. Going back to the Synaptics story, there was a massive run-up on price during COVID, if you remember, in the semiconductor business. That never reset. Once the demand fell off, and we saw it fall off very significantly, pricing didn't go down. We would say the same thing here. I'm not worried about a pricing reset because I think it's a lot more durable than is given credit for, and I think the evidence point is what we saw in semis during the COVID crisis, the massive run-up from TSMC that people passed on, and that proved to be sustainable. Yep. Great. I think that brings us to the top of the hour. Michael, what a phenomenal run it's been. I mean- I just want my picture out there on Times Square like you've got. That's pretty good, man. Darlene is right there. That is pretty good. I need to get my picture out there. That's amazing. I can't say this enough, I think you guys have executed phenomenally. I think as you look out, you have fiscal 2028 number at $8 billion, but everything that you say from $10 billion on the OCS and the whole NPO, CPO coming together, and you have the whole laser side picking up, I think the opportunity is just phenomenal. My job is to keep you happy, okay? Yeah. That's it. Do another 10x in the next 18 months, I guess. Thanks, Vijay. All right. Thanks a lot. No, I appreciate it. Thank you, everybody, for joining us. Yep. Thank you