Papa Talla Sylla

Papa Talla Sylla requested details on the strong DCI growth, including customer types, underlying drivers, and the sales mix versus traditional telecom. He also asked for color on the demand for sub-400G datacom products.

Answer

CEO Jim Anderson attributed the strong DCI growth to Coherent's competitive ZR/ZR+ product line and a dual go-to-market strategy of selling both components and full transceivers. He noted demand is primarily driven by multi-data center interconnect workloads. Regarding legacy products, he stated that while demand for sub-400G remains relatively strong, the market is clearly transitioning to 800G and 1.6T, referencing the transition model from the Investor Day.

Papa Talla Sylla asked for details on the collaboration with Alchip and questioned the slight sequential dip in the Q3 gross margin guidance despite the favorable mix from the growing Scorpio business.

Answer

President & COO Sanjay Gajendra described the Alchip partnership as part of a broader strategy to build an open, interoperable, multi-vendor AI rack for hyperscaler customers. CFO Mike Tate explained the gross margin guidance reflects solid growth in the lower-margin Taurus hardware module business alongside Scorpio's growth, which tempers the overall margin percentage.