Coherent pulled in $2.05 billion worth of revenue for the fourth quarter (Q4) of its fiscal 2026, as the photonics vendor overcame the supply chain status quo blighting its rivals.
Coherent’s Data Center & Communications segment profits grew almost 60% year-on-year (YoY) to account for 79% of its Q4 revenue. Within that, data center revenue grew 66% YoY and 24% sequentially, while communications grew 56% YoY and 11% sequentially.
Transceivers remained a major business, with Coherent expecting 800 Gb/s (800G) sales to continue growing YoY, with 1.6 Tb/s (1.6T) units to rise rapidly through 2026 and into 2027 as adoption spreads to more customers.
Beyond transceivers, Coherent saw optical circuit switching (OCS) revenue increase sequentially in Q4. Coherent CEO Jim Anderson claimed OCS represents more than $4 billion of addressable market opportunity “across data center interconnect, scale-out, and scale-across networks.”
On the scale-out front, Anderson projected a $2 billion-plus opportunity by 2030 for Coherent’s multirail optical transport architecture designed for connecting AI data centers. Initial revenue for the segment is expected in the first half of 2027, as Anderson talked up the transition from copper to optical connectivity in underpinning the ongoing AI data center buildout.
Co-packaged optics (CPO) was also highlighted, with Coherent’s Texas facility ramping continuous-wave (CW) laser production for CPO over the quarter. This includes products covered by its partnership with Nvidia, which invested $2 billion in Coherent earlier this year. CPO revenue is expected to start ramping in fiscal Q2.
Away from the AI wave, Coherent also put its success down to overcoming the bottleneck in indium phosphide (InP), which is essential for high-speed optical components. Anderson said its transition to 6-inch InP production was “a key driver of revenue growth and margin expansion,” as driven by its production lines in both Texas and Sweden. According to Anderson, those lines are producing electro-absorption modulated lasers (EMLs), CW lasers, and photodiodes with yields that continue to exceed Coherent’s 3-inch lines.
“We remain on track to more than double our internal indium phosphide output capacity again by the end of calendar 2027. We have secured the substrates and other critical inputs required to support this ramp. Given the strength of customer demand, we are planning additional capacity beyond 2027,” Anderson said.
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