Lumentum Expands Manufacturing to Meet Laser Chip Shortages

Lumentum is expanding its global manufacturing footprint to combat severe capacity shortages for its laser chips. Demand currently exceeds supply by 30% through 2028, with some products under-shipped by 70% for the coming year and capacity nearly sold out through 2029.

To resolve these bottlenecks, the company is adding a second fabrication facility in Kofu, Japan, to complement its existing site in Sagamihara. Lumentum also recently opened a facility in Greensboro, North Carolina, in partnership with Nvidia to increase domestic production.

Company leadership indicated plans to pursue mergers and acquisitions within the next year to integrate new technology and manage the convergence of optical components and semiconductors. Simultaneously, Lumentum is consulting with officials in Washington, D.C., regarding potential bans on Chinese optical transceiver imports. While such a ban could benefit the company's portfolio, Lumentum expressed concern over supply chain disruptions, as Chinese suppliers currently control approximately 70% of the U.S. shipping transceiver market.