Meta Marshall: Great. Thank you.
Operator: One moment for our next question. Our next question comes from Simon Leopold of Raymond James. Your line is open.
Simon Leopold: Great, thanks for taking the question. I wanted to get a bit of a clarification type question here in that, unlike last quarter’s shareholder letter, and by the way, we like the way you’re doing this, it’s helpful. This one did not mention explicitly several hundred million of AI-related datacom sales in the outlook. And I’m just wondering how you’d like us to interpret that exclusion versus the prior quarter’s letter? And then I’ve got a quick follow-up.
Chuck Mattera: All right. Simon, thanks for your question. I’d like to get us back to basics. We have the guidance. The guidance is the guidance. I made some additional comments this morning to give a sense that we’re still aiming to do more. But I don’t want to get us into a mode where we’re going to have guidance and then guidance on top of the guidance. So we just want to get us back to the basics. That’s what we’re doing. And as I indicated today, we might have some upside to it that we can achieve. For sure, we have upside as an opportunity. Okay?
Simon Leopold: That’s very helpful. Thank you. And then in terms of this AI pipeline of business, I’m just wondering if you could help us bracket how much of this is hyperscale exposure? And how much of it is non-hyperscale? And what I’m getting at is trying to understand a little bit about the customer mix and concentration of the pipeline. Thank you.
Chuck Mattera: It’s a — Sanjay will take that, Simon. I can tell you, it grows every day. Sanjay?
Sanjai Parthasarathi: Yes, thanks Chuck. So last quarter, Simon, we did 60% of our business came from hyperscalers, and this is both direct, as well as indirect sales into hyperscalers. Does that help?
Simon Leopold: Thank you. Yes it does. I guess I’m wondering about the pipeline is more so than the most recent quarter.
Sanjai Parthasarathi: So our pipeline is still pretty strong. We expect to — in fiscal ‘25, for example, we believe that 80% of our datacom transceiver revenues will be from hyperscalers. A lot of it, majority of it is — vast majority of it driven by AI/ML.
Simon Leopold: Thank you very much. Appreciate that.
Chuck Mattera: Simon, thank you for your feedback too on the letter.
Sanjai Parthasarathi: Thanks, Simon.
Operator: One moment for our next question. Our next question comes from Jed Dorsheimer with William Blair. Your line is open.
Jed Dorsheimer: Hi. Thanks for taking my question here, guys. I guess, first question, just want to shift from, you know, most of the others around the 800G and just on some of your comments around the consolidation in compound semis, you mentioned this, one if you could give a little bit more color on maybe metric fab. And then two, on the new product introduction, you talked about reducing or improving cycle times. Could you talk about where they’re at now and where you hope to get those to. Thanks.
Giovanni Barbarossa: Okay, thanks. This is Giovanni here, so thanks for the question. So we — when we acquired Finisar, we acquired a number of wafer fabs, which at that time were pretty much fully utilized and as we were able to transfer products and manufacturing lines between sites and so forth, we were able to identify ultimately what the best footprint for the compound semiconductor manufacturing for the company was going to be. So that’s what we are basically doing now because we couldn’t do it that fast. So now what we’re doing, we are — we have announced several shutdowns of smaller fabs, and we intend to move and integrate those manufacturing lines into our largest fab, which is in Sherman, Texas. So there was a footprint.
We still have some other fabs between Europe and North America there will still stay with the standalone, because the cost of moving those product lines will be too high. And also, we’ll require a lot of e-qualifications that we cannot, we don’t see it advantage in moving those product lines. But at least for the gallium arsenide particularly the gallium arsenide, VCSEL-based type of powders, in some of the indium phosphide-based products, we ultimately decided that Sherman, Texas would be our center of excellence. Our consolidated [Technical Difficulty].
Chuck Mattera: I’ll take the second part, Jed. Thanks for your question with regard to MPI cycle times. I would say one thing I think you know that we’re built for speed. This place is organized for a great sense of urgency about everything we do. One of the benefits we have with our global footprint is we can do things 24 hours a day, seven days a week. That’s not so easy for everybody else to say. I would tell you that I can’t give you a baseline generically, because we have so many platforms and so many products in the company, but I will point out that using AI in this last year, our teams have demonstrated a factor of two reduction in the cycle time for launching new products from our fiber laser business. And that is going to be a contagious example that goes around the company.
I think that AI is going to be a great driver, but it’s not the only thing that we need to do. And so a factor of two everywhere is a starting point for the mindset of the management team. Okay?
Jed Dorsheimer: Got it. Thank you. Just as a follow-up, on the silicon carbide business, we are seeing greater restrictions on raw materials from China. And I’m just wondering, graphite is an important component to both the furnaces, as well as the input material. Could you just update on supply chain exposure and if any in terms of how you see specific to graphite? Thanks.
Chuck Mattera: Thanks, Jed. Hey, Sohail, are you out there?
Sohail Khan: Yes, yes. Jed, thanks for your question. First answer is no, we don’t have the exposure. We have multi-sourced for both this material and the other components. And we have put in place long-term agreements. And none of our graphite suppliers have the basics coming from China.
Jed Dorsheimer: That’s helpful. Thank you, Sohail.
Chuck Mattera: Thank you, Jed.
Operator: One moment for our next question. Our next question comes from Richard Shannon with Craig-Hallum. Your line is open.
Richard Shannon: Great. Thanks, guys, for taking my questions. I’ll also echo my happiness with the shareholder. Keep it up, please. I’m going to follow-up on the topic of telecom. I guess one of the questions I had, looking at some reports here in earning season so far, including last night, we were seeing some inventory burns still taking place at the equipment level here. I’m wondering why you’re seeing some start of a pickup here. And to the degree to which you can describe it, how much of this recovery is coming from transceiver type products like ZR that you point out to shareholder with the letter versus things like WSSs and ROADMs?
Chuck Mattera: So thanks for the question. So right now I think what we’re seeing is a little bit more strength on the WSS and the ROADM, the amplifier and that portion of the business. And it’s really as our customers are burning down inventory right now, we’re starting to see different product lines there have a small pickup this quarter and we think that’s going to continue to double-digits for the second-half of FY ‘24. Our transceiver-based products, we see a lot of design and activity happening right now. There’s a lot of RFQs and RFPs, especially for new technology products like our 100 gig Coherent ZR and there’s an increase in RFP activity around 800 gig, which is coming next year. And so we think that’s very positive for that segment, but we think that’s going to be more delayed towards the latter half of FY ‘24 and early FY ‘25 from a ramp perspective. Does that help provide a little more color?
