Serenity: Anticipated AI Optical Interconnect Upstream Material Prices to Continue Rising

BlockBeats News, July 6th, Serenity reported that Nomura Securities' latest research note indicated that as AI infrastructure construction continues to heat up, the upstream photonics material supply chain is facing a dual pressure of surging demand and tightening supply. AXTI and IQE are among the key beneficiaries in the Indium Phosphide (InP) industry chain. In terms of pricing, the price of 2-inch InP substrates is expected to increase by 42% to 76%, while 3-inch InP substrates are projected to rise by around 78%; the price of 2-inch EML epitaxial wafers is expected to increase by 50% to 75%, and the price of 3-inch CW epitaxial wafers is also set to increase by over 40%.

The report suggests that the continuous expansion of AI data centers by hyperscale cloud service providers is driving the entire optical communication industry chain into a phase of supply-demand imbalance. Bottleneck signs have emerged in every aspect, from material prices and end demand to supply capacity.

Serenity stated that as the AI optical interconnect demand continues to grow over the next few years, the prices of upstream photonics materials will continue to rise, similar to the pricing cycle experienced by Sandisk in the past. Over the next two years, as the AI demand curve further ascends, the accuracy of this assessment remains to be validated by the market.