Moody
Equity Investor, Semiconductor Research
Soitec's SOI wafers remain necessary no matter who builds optical engines if co-packaged optics standards take hold. Around 95% of these photonics wafers come from Soitec, so consolidation among module makers changes the buyer, not the need for wafers. Large buyers such as TSMC or Broadcom could pressure pricing and seek a second source, though none is apparent before 2030. That pricing risk is by far smaller than the module makers' architecture risk. x.com
Soitec's near-monopoly in silicon photonics substrates makes it one of the highest-quality AI plays. Long-term contracts allow dynamic pricing if agreed volumes are exceeded; customer prepayments make further dilution highly unlikely, and spare capacity with a largely fixed cost base leaves plenty of room to grow. Bank of America targets €300 versus about €117 now. The stock will remain volatile and is only suitable for investors who can tolerate that and hold for 1–3 years. x.com
Putting CPO optical engines in the interposer should make TSMC the leader at that packaging task. The OCI-MSA diagram shows an optical engine mounted on a high-density interposer; GlobalFoundries has a modest agreement in the area, but should not be expected to earn the same profit. x.com
Soitec wins from Google's TPUv8i regardless of which foundry builds the chips, because it supplies the photonics-SOI wafers upstream. TPUv8i's silicon-photonics optical circuit switch adds a new layer of large photonic dies, and its signal loss forces transceivers to go coherent, using about 2-2.5x more silicon per port and roughly 3-4x the wafer starts. Risks include coherent modulators moving to indium phosphide or thin-film lithium niobate, and Marvell building its own photonics. x.com
Soitec now looks overextended after a rapid run, and a pullback is likely. The AI photonics bottlenecks behind the thesis are real, but it is hard to judge what premium each name deserves, which makes the stock hard to value at these levels. x.com
Broadcom's integrated optics, electronics and packaging could lower custom-chip system costs because separate suppliers defend their margins. At similar valuations, it is preferred to Nvidia and has more room to beat expectations. Google TPU v8 shipments are estimated at 4.0M in 2026 and 9.1M in 2027, assuming Broadcom supplies the remainder after MediaTek's allocation. Anthropic financing adds value only if chip profit exceeds likely support payments and capacity costs. x.com x.com
Soitec will recover because it is literally the foundation for expanding co-packaged optics capabilities and is too big to stay down. x.com
Soitec holds a monopoly on the Photonics SOI wafers the AI photonics trade runs through, yet trades at just 3.6x forward EV/revenue. Silicon photonics chips in AI data centers, from transceivers to Nvidia switches and Broadcom ASICs, are built on it via its proprietary Smart Cut process; GlobalWafers exits by 2027 and Shin-Etsu sells little. Optical interconnect grows from about $10 billion to over $70 billion by 2030, and top customer Tower Semiconductor targets 5x capacity by end-2026. x.com
TSMC may lose pricing power as performance gains shift from shrinking transistors to stacking, interconnects and optics, while logic folding could make older processes competitive. Despite strong leading-edge demand, investors may overestimate the profit share its node leadership can retain. Its cautious expansion and past reluctance toward advanced packaging suggest a risk-averse culture that protects returns but could leave it late to disruptive technologies and key customers. x.com
Optical suppliers face demand beyond capacity, strengthening the sector's case for the coming months. Lumentum's CEO says it is effectively sold out through early 2029; Ciena says lead times limit growth, and Coherent cites constraints across nearly every product line. Applied Optoelectronics doubled its share count to expand capacity and meet demand. Soitec raised guidance twice this year; Marvell raised guidance and its 2030 TAM, while Broadcom sees 4x EPS by 2030 on visible demand. x.com
Soitec holds a near-monopoly on photonics-grade SOI wafers, the irreplaceable base for mass-produced silicon photonics in AI data centers, giving it 5x potential. SOI's oxide layer keeps light in the top silicon waveguide, and Soitec is the only supplier certified by TSMC, GlobalFoundries and Tower, with over 80% share. Revenue fell 22% year over year on customer destocking, and a CEO exit and withdrawn guidance are noise; 1.6T and CPO should drive the ramp over 2-3 years. x.com x.com
Soitec offers early exposure to thin-film lithium niobate (TFLN), an optical technology no one is watching yet, on top of its silicon wafers. Soitec is developing 8-inch TFLN lines this year. TFLN's power and space savings complement co-packaged optics, Broadcom is sampling TFLN parts using Hyperlight IP, and companies will have to adopt it by the 3.2T rollout; Hyperlight's multiple suppliers may include Soitec. Higher cost may slow adoption at 1.6T, where Lumentum's EMLs dominate. x.com x.com
