MACOM took a stake in laser wafer supplier IQE and will sell AI lasers from 2028, against Lumentum

On November 5, MACOM Technology Solutions▲+10.84% — MACOM Technology Solutions, up 10.84 percent today, the Nasdaq-listed semiconductor maker, reported fiscal 2026 revenue of $1,327.6 million, up 37.3%↗ ¹. The forward-looking-statements paragraph of that release, the boilerplate most readers skip, carries the two sentences that matter: a "recently completed" equity investment in IQE plc▲+1.23% — IQE plc, up 1.23 percent today, the Cardiff company that grows the indium phosphide wafers inside datacentre lasers, and "the anticipated timing of our entry into new markets, including the CW laser market" ¹.

Six days earlier, Marvell▲+5.82% — Marvell, up 5.82 percent today had agreed to buy Lumentum, the laser and optical component maker, for $115 billion in stock↗ ². The Inference piece on that deal left open who supplies the wafers for AI lasers. MACOM's boilerplate is the first answer on record: a chipmaker that now owns a piece of its raw-material supplier and plans to sell the finished laser itself.

Data center paid for the push into lasers

Fiscal Q4 revenue was $424.8 million, up 62.7% year on year, with datacenter revenue of $188.1 million up about 37% sequentially, book-to-bill at 1.4:1 and record backlog ³. Datacenter grew 74% in fiscal 2026 and management expects fiscal 2027 to beat that, with first-quarter revenue guided to $450 million to $460 million and datacenter up another 15% sequentially ¹³.

The customer becomes the competitor in 2028

Chief executive Stephen Daly told analysts↗ the indium phosphide laser "battle is won or lost on the quality of the facet", and that recent work took it from a facet "cut by a chainsaw" to one "cut by a sushi knife" ³. The progress, he said, supports "MACOM's strategy to enter the multibillion-dollar CW laser market, which we are targeting for 2028", with lasers planned for 800G, 1.6T and 3.2T links ³. He added that MACOM will be "a merchant supplier of lasers" and "one of the few U.S.-based manufacturers of this technology" ³.

The market it enters is served by Lumentum▲+5.71% — Lumentum, up 5.71 percent today, whose latest quarter showed revenue of $1.26 billion, up from $533.8 million a year earlier ², and by Sivers Semiconductors, whose continuous-wave DFB lasers are the core of its datacentre business on roughly $29 million of revenue over the last twelve months, next to MACOM's $1.33 billion ⁴.

The bull and the bear buy from the same wafer

IQE's side of the trade strengthened the same week: first-half trading exceeded expectations, revenue guidance was raised on accelerating indium phosphide demand from AI datacentre photonics, the company carries no bank debt, and the shares closed 5.3% higher at 36.60p↗ ⁵. In April, IQE banked an £81 million fundraise↗ built around MACOM's strategic investment plus long-term supply agreements for indium phosphide and gallium nitride, with Panmure Liberum calling the balance sheet "secured" ⁶. That is the bull case, a funded and locked demand curve.

The bear case sits in Daly's own words about supply: "We engage very privately and confidentially with our supply chain. We make sure that we are getting the wafers we need" ³. A shareholder who is also the buyer can shape the wafer price, and the substrate behind it is scarce: China holds 70% of world indium phosphide supply↗ and wafer prices rose about 250% in June ⁷.

Two documents settle it

Neither company has disclosed the size or the terms of MACOM's stake ¹. Two documents price the risk. MACOM's fiscal 2026 Form 10-K, which carries equity investments in its notes, will say how much of IQE the buyer owns ⁵. IQE's next regulatory news service statement, which must show whose demand the raised guidance assumes, will say whether MACOM counts as wafer customer or future rival ⁵. Until they land, IQE's 36.60p values a demand curve whose strongest named beneficiary turns competitor in 2028 ⁵.