Coherent's proposed FCC ban lands in 2028; its Chinese laser supply is a $601 million letter of intent
The FCC ban being weighed covers 3.2-terabit parts that ramp in 2028, when Coherent's $20 billion contracts also start paying; 2027 is sold out either way. What remains unpriced is the indium phosphide behind the ramp, still backed by a letter of intent, not a contract.
Richard Tangtwo-minute read
The FCC's proposed ban on Chinese optical transceivers read as a windfall for Coherent+5.75% — Coherent, up 5.75 percent today, and the stock jumped 18% on it. Read the dates and the story changes: the threshold under consideration covers parts that do not ramp until 2028, the same window Coherent's own $20 billion contracts start paying. Calendar 2027 is already sold out. A ban moves price, not volume. And the input behind Coherent's expansion still traces to China.
The rule and the revenue land in the same window
Reuters reported on November 10 that Microsoft−2.43% — Microsoft, down 2.43 percent today, which has 35 US data centers under construction and 134 more planned, is lobbying the administration to drop the ban 1. China holds about two-thirds of the global transceiver market, led by Zhongji Innolight and Eoptolink, and US makers lack the scale to replace them 1. The threshold being weighed covers 3.2-terabit parts, whose production is not expected to ramp until 2028, with wide installation in 2029 1.
That timing sits exactly on Coherent's own buildout. Its second PhotonLink agreement, $20 billion over five years with an unnamed AI customer, begins ramping revenue in early 2028 2. On the November 4 call, chief executive Jim Anderson said calendar 2027 is "basically booked out" and customers are now booking 2028 23.
Capex is outrunning revenue as Coherent builds out indium phosphide
Coherent is spending faster than it is selling to build laser capacity
- Revenue
- Capex
Data
| Revenue | Capex | |
|---|---|---|
| Q2 '24 | 1.31 | 0.1 |
| Q3 '24 | 1.35 | 0.09 |
| Q4 '24 | 1.44 | 0.11 |
| Q1 '25 | 1.5 | 0.11 |
| Q2 '25 | 1.53 | 0.13 |
| Q3 '25 | 1.58 | 0.1 |
| Q4 '25 | 1.69 | 0.15 |
| Q1 '26 | 1.81 | 0.29 |
| Q2 '26 | 2.05 | 0.56 |
| Q3 '26 | 2.37 | 0.78 |
The unpriced input
Coherent doubled its indium phosphide laser capacity a quarter ahead of plan and plans to more than double it again by the end of 2027; management called the material its binding constraint for the past 18 months 2.
The new supply behind that ramp is a letter of intent: Optics Technology Holding, a Shenzhen-listed Chinese maker, signed an LOI to supply indium phosphide substrates worth at least $601 million 45. No binding contract, no price, no schedule is public. Beijing's export licensing on indium phosphide wafers, in force since February 2025, was never suspended under the trade truce 6. The de-China story still runs through a Chinese permit office.
Whose money moves
The market already round-tripped: $228.58 on November 9, $213.66 a day later 78. That prices a 2029 margin story while the nearer facts are the Q2 revenue guide of $2.55 billion to $2.75 billion, capex that reached $776 million in Q1, and an LOI that must become a contract 29. Watch those, not the headline.
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