Optical module shipments fell short of expectations

Shipments of certain optical modules, particularly 1. 6T units, fell short due to component shortages, supply chain bottlenecks, and mismatches in high-speed transceiver production.

Supply Chain Constraints

The shortfall in optical module shipments is largely driven by component shortages, especially in advanced 5nm and 3nm DSPs and constrained EML laser production. These components are critical for high-speed modules like 800G and 1. 6T, and their scarcity has extended lead times beyond 40 weeks for 800G modules and delayed 1.

6T deployments. Procurement teams relying on legacy forecasting models are struggling to meet demand, and spot-buying from secondary suppliers introduces firmware mismatches and physical layer instability, further limiting usable shipments.

Product-

Specific Trends

While 800G optical modules have largely met demand and are experiencing rapid adoption in hyperscale data centers, 1. 6T modules have seen initial commercial shipments but remain below expectations due to limited production capacity and ongoing component constraints. The 400G modules temporarily declined as customers transitioned to 800G, but demand is expected to rebound.

Technical ChallengesHigh-speed modules are sensitive to firmware and DSP mismatches, which can cause PAM4 signal degradation, EEPROM mapping failures, and FEC errors. These technical issues mean that even when modules are shipped, not all units are immediately deployable, effectively reducing the net supply available to customers.

Market Impact

Despite strong overall demand from hyperscalers like Amazon, Meta, and Google, the shortage of critical components has constrained growth in transceiver sales, particularly for 1. 6T modules. Vendors such as Coherent, Innolight, and Lumentum have reported strong revenue growth, but shipment volumes for the newest high-speed modules remain limited.

Outlook

Shipments of 1. 6T modules are expected to gradually increase in the second and third quarters of 2026 as supply chain issues are addressed and production ramps up. Meanwhile, 800G modules continue to drive market growth, benefiting from a more mature supply chain and optimized power-to-performance ratios.

In summary, the shortfall in optical module shipments is a combination of component scarcity, technical deployment challenges, and transitional demand shifts, with recovery expected as production stabilizes and supply chains adapt.