Serenity: AI optical interconnect upstream material prices are expected to continue rising

BlockBeats news, on July 6th, Serenity stated that a recent Nomura Securities research report indicates that, as AI infrastructure construction continues to heat up, the upstream photonic materials supply chain is facing dual pressures of surging demand and tightening supply. AXTI and IQE are among the main beneficiaries of the indium phosphide (InP) industry chain. In terms of prices, the price of 2-inch InP substrates is expected to rise by 42% to 76%, while 3-inch InP substrates are expected 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 expected to rise by more than 40%.

The report finds that hyperscale cloud service providers are continuously expanding AI data centers, driving the entire optical communication industry chain into a tighter supply-demand phase. Bottlenecks have already appeared in all segments, from material prices, terminal demand to supply capacity.

Serenity states that, as demand for AI optical interconnects continues to be released over the coming years, upstream photonic material prices will continue to rise, similar to the price increase cycle previously experienced by SanDisk. Over the next two years, as the AI demand curve rises further, whether this judgment is accurate remains to be verified by the market.