Q4 2024 Applied Optoelectronics Inc Earnings Call
Speaker Change: Good afternoon, I will be your conference operator. At this time, I would like to welcome everyone to Applied Optoelectronics fourth quarter and full year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.
Speaker Change: After the speaker's remarks, there will be a question and answer session. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note that this call is being recorded.
Speaker Change: I would now like to turn the call over to Lindsay Savarese, Investor Relations for AOI. Ms. Savarese, you may begin.
Thank you. I'm Lindsay Savarese, Investor Relations for Applied Optoelectronics.
Speaker Change: I am pleased to welcome you to AOI's 4th Quarter and Full Year 2024 Financial Results Conference Call.
After the market closed today, AOI issued a press release.
Speaker Change: Announcing its fourth quarter in full year 2024 financial results and provided its outlook for the first quarter of 2025.
Speaker Change: The release is also available on the company's website at ao-inc.com. This call is being recorded and webcast live. A link to the recording can be found on the investor relations section of the AOI website and will be archived for one year.
Speaker Change: Joining us on today's call is Dr. Thompson Lin, AOI's Founder, Chairman and CEO and Dr. Stefan Murray, AOI's Chief Financial Officer and Chief Strategy Officer.
Speaker Change: Thompson will give an overview of AOI's Q4 results, and Stefan will provide financial details and the outlook for the first quarter of 2025.
The question and answer session will follow our prepared remarks.
Speaker Change: Before we begin, I would like to remind you to review AOI's Safe Harbor Statement.
Speaker Change: On today's call, management will make forward-looking statements. These forward-looking statements involve risks and uncertainties as well as assumptions and current expectations.
Speaker Change: which could cause the company's actual results, levels of activity, performance, or achievements of the company or its industry to differ materially from those expressed or implied in such forward-looking statements.
Speaker Change: In some cases you can identify forward-looking statements by terminologies such as believes, forecasts, anticipates, estimates, suggests, intends, predicts, expects.
Speaker Change: Plans, May, Should, Could, Would, Will, Potential, or Thinks, or by the negative of those terms,
Speaker Change: or other similar expressions that convey uncertainty of future events or outcomes.
Speaker Change: The company has based these forward-looking statements on its current expectations, assumptions, estimates, and projections.
Speaker Change: While the company believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the company's control.
Speaker Change: Board looking statements also include statements regarding management's beliefs and expectations related to the expansion of the reach of its products into new markets and customer responses to its innovations, as well as statements regarding the company's outlook for the first quarter of 2025.
Transcription by ESO. Translation by —
Speaker Change: Except as required by law, AOI assumes no obligation to update these forward-looking statements for any reason after the date of this earnings call to conform these statements to actual results or to changes in the company's expectations.
More information about other risks.
that may impact the company's business.
Speaker Change: are set forth in the risk factor section of AOI's reports on file with the SEC, including the company's annual report on Form 10-K and quarterly reports on Form 10-Q.
Speaker Change: Also, all financial results and other financial measures discussed today are on a non-cap basis unless specifically noted otherwise.
Speaker Change: Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
Speaker Change: A reconciliation between our GAAP and non-GAAP measures, as well as a discussion of why we present non-GAAP financial measures, are included in the company's earnings press release that is available on AOI's website.
Before moving to the financial results.
Speaker Change: I'd like to note that AOI Management is attending the Susquehanna Annual Technology Conference virtually on Friday, February 28.
Speaker Change: Management will host an investor session at OFC on Tuesday, April 1st in San Francisco. This discussion will be webcast live and a link to the webcast will be available on the investor relations section of the AOI website.
Speaker Change: We would also like to note that the date of AOI's first quarter 2025 earnings call is currently scheduled for May 8th, 2025.
Speaker Change: Now, I would like to turn the call over to Dr. Thompson Lin, AOI's Founder, Chairman, and CEO.
Speaker Change: Thank you, Lindsay, and thank you for joining our call today. During the fourth quarter, we deliver revenue of $100 million.
Speaker Change: which was in line with our guidance range of $94 million to $104 million.
Speaker Change: We recorded Nangke cost margin of 28.9%, which was in line with our guidance range of 27.5% to 29.5%. All Nangke lost per shares of $0.02.
Speaker Change: was in line with our government's range of a loss of $0.04 to earnings of $0.04 per share.
Speaker Change: Total revenue for our data center products of $44.2 million was essentially spread year-over-year and was up 8% sequentially.
Speaker Change: We're moving for our 4 energy products increase 40% year-over-year and 70% sequentially.
Speaker Change: The growth was primarily driven by increased adoption of 400G products by our data center customers along with new customers that we began shipping to during the ease.
The total revenue in our CATV settlement was $52.2 million.
Speaker Change: which increased more than four times year over year and more than double sequentially, largely driven by a shipment of our 1.8 GHz amplifiers for one of our major MSO customers.
As we have discussed on our prior earning calls.
Speaker Change: All MSO customers are in the process of upgrading their outside current networks so that they can support higher bandwidth in the return path direction and eventually enable DOSSIS 4.0.
Speaker Change: We are pleased to announce that during the quarter, we will receive a substantial increase
All do.
Speaker Change: for our quantum bandwidth networking products from a top North American cable operator.
Speaker Change: This order is for products that began shipping this month. With that, I will turn the call over to Stefan to review the details of our Q4 performance and outlook for Q1. Stefan.
Thank you, Thompson.
Speaker Change: We're pleased to end the year on a high note, driven by strength in both our data center and CATB businesses, and with solid momentum heading into 2025.
Speaker Change: As Thompson mentioned, our Q4 results were in line with our expectations.
Speaker Change: We delivered revenue of $100 million, which was in line with our guidance range of $94 million to $104 million.
Speaker Change: We recorded non-gap gross margin of 28.9%, which was in line with our guidance range of 27.5% to 29.5%.
Speaker Change: And lastly, our non-gap loss per share of $0.02 was within our guidance range of a loss of $0.04 to earnings of $0.04 per share.
Speaker Change: During the fourth quarter we continued to execute on many of the initiatives that we laid out last year.
Speaker Change: In our data center business, on our last few calls, we discussed how we had begun to receive orders for 400G products from another large hyperscale customer.
Speaker Change: In line with our expectations, we continue to see increasing orders for 400G products, both from long-term hyperscale customers, as well as from this new hyperscaler that we've been talking about for the last several quarters.
Speaker Change: We continued to make good progress on our 800G products, with customers beginning to give us clear demand forecasts, which indicate ramping demand beginning in the second half of 2025, in line with our expectations.
Speaker Change: In our CATV business, as Thompson mentioned, we received a substantial order for our quantum bandwidth networking products from a top North American cable operator.
Speaker Change: These products began to ship this month and we expect additional orders throughout the year based on forecasts we have received from this customer.
Speaker Change: We are encouraged by the demand that we are seeing for our CATV products and are very excited to announce that our next-gen quantum bandwidth amplifiers have already begun to be deployed by a major North American MSO as part of its publicly announced network upgrade project.
Speaker Change: Lastly, during the quarter, we took steps to expand our production capabilities.
Speaker Change: We have been retrofitting our facility in Sugar Land, Texas, to accommodate new automated production equipment, which we expect to begin to receive next month. This equipment will be used for the production of both 400G and 800G transceiver products.
Speaker Change: We also signed an agreement to lease an additional building in Taiwan, which we are outfitting in order to increase production of our data center and CAPB products there.
Speaker Change: Returning to our fourth quarter results, our total revenue was $100 million, which was up 66% year over year, and up 54% sequentially, and was in line with our guidance range of $94 million to $104 million.
Speaker Change: During the fourth quarter, 44% of revenue was from data center products, 52% was from CATV products, with the remaining 4% from FTTH, telecom, and other.
Speaker Change: In our data center business, Q4 revenue came in at $44.2 million, which was essentially flat year-over-year and increased 8% sequentially.
Speaker Change: The sequential increase was due to shipments to existing customers, along with the new Hyperscale data center customer that we've talked about for the last several quarters.
Speaker Change: In the fourth quarter, 61% of data center revenue was from 100G products, 32% was from 200G and 400G transceiver products.
and 8% was from 40G Tremsever products.
Speaker Change: As our data center customers work on building out their next generation AI focused data center architectures, we remain active in our 800 duplication efforts with several hyperscale customers.
Speaker Change: During the quarter, we received the first significant demand forecast from one of our Hyperscale customers.
Speaker Change: that bolsters our previously held expectation of a second half 2025 ramp in 800G sales.
Speaker Change: In our CATB business, with the explosive growth of data consumption and rising user expectations.
Speaker Change: We are already being recognized by cable operators as a preferred partner to ensure that these upgrades minimize cable subscribers network interruptions and also optimize performance.
Speaker Change: As a result, CATV revenue in the fourth quarter was $52.2 million, which was up more than four times year-over-year and more than doubled sequentially.
Speaker Change: This significant increase is due to the ramping orders for our 1.8 GHz amplifier products.
Speaker Change: We continue to believe our CATV revenue will ramp further in Q1 and will remain elevated throughout 2025.
Now, turning to our telecom segment.
Speaker Change: Revenue from our telecom products of 3.5 million dollars was up 26% year over year and up 25% sequentially. Looking ahead, we continue to expect telecom sales to fluctuate from quarter to quarter.
Transcription by ESO. Translation by —
Speaker Change: For the fourth quarter, our top 10 customers represented 97% of revenue, up from 95% in Q4 of last year.
Speaker Change: We had three greater than 10% customers, two in the data center market, which contributed 31% and 11% of total revenue, respectively, and one in the CAPB market, which contributed 52% of total revenue.
In Q4, we generated non-GAAP gross margin of 28.9%.
which was within our guidance range of 27.5% to 29.5%.
Speaker Change: and was up from 25% in Q3 of 2024 and down from 36.4% in Q4 of 2023.
Speaker Change: The sequential increase in our gross margin was driven primarily by our favorable product mix, including growth in our CATP revenue.
Speaker Change: Looking ahead, we continue to expect that our gross margins will improve as we see the impact of manufacturing efficiencies in our CATV production and improving product mix.
Speaker Change: We remain committed to our long-term goal of returning our non-GAAP gross margin to around 40% and continue to believe that this goal is achievable.
Speaker Change: Total non-GAAP operating expenses in the fourth quarter were $31.5 million, or 31.4% of revenue.
Speaker Change: which compared to $21.6 million or 35.7% of revenue in Q4 of the prior year, primarily due to increased R&D spending in 800G, 1.6 terabit, and quantum bandwidth products.
Speaker Change: Looking ahead, we expect non-GAAP operating expenses to increase slightly next quarter and range from $32 million to $33 million.
Speaker Change: In 2025, we anticipate modest additional increase, varying with quarter-by-quarter fluctuations, mainly in R&D expenditures.
Speaker Change: Non-GAAP operating loss in the fourth quarter was $2.5 million compared to an operating income of $0.4 million in Q4 of the prior year.
Speaker Change: Gap net loss for Q4 was $119.7 million, or a loss of $2.60 per basic share, compared with a gap net loss of $13.9 million, or a loss of $0.38 per basic share in Q4 of 2023.
Speaker Change: Our gap net loss in the fourth quarter of 2024 included a one-time charge of $112 million related to the exchange of our convertible notes in Q4.
Speaker Change: This compares to a non-GAAP net income of $1.6 million, or $0.04 per basic share in Q4 of the prior year.
Speaker Change: The basic shares outstanding used for computing the earnings per share in Q4 were $46.1 million.
Turning now to the ballot sheet.
Speaker Change: We ended the fourth quarter with $79.1 million in total cash, cash equivalents, short-term investments, and restricted cash.
Speaker Change: This compares with $41.4 million at the end of the third quarter of 2024.
Speaker Change: We ended the quarter with total debt, excluding convertible debt, of $46 million, compared to $39.4 million at the end of last quarter.
Speaker Change: As of December 31, we had $88.1 million in inventory, which compared to $64.4 million at the end of Q3.
Speaker Change: The increase in inventory is primarily for raw materials purchased for customer orders.
Speaker Change: During the quarter, we raised $53.9 million net of costs and fees on our previously announced At-The-Market program.
Speaker Change: We made a total of $25.7 million in capital investments in the fourth quarter, which was mainly used for manufacturing capacity expansion for our 400G and 800G transceiver products.
Speaker Change: This brings our total CapEx for the year to $48.8 million.
which was up compared to 2023 of $12.6 million.
Speaker Change: Reflecting higher capital needs as we expand production to accommodate increased demand.
Speaker Change: Going forward, we expect to make sizable CapEx investments over the next several quarters as we prepare for increased 400G, 800G, and 1.6 terabit data center product production in 2025.
Speaker Change: For the year, we expect between $120 million and $150 million in total CapEx.
Speaker Change: We expect to finance these investments through a combination of cash on hand, cash generated from operations, and some equity sales, including ongoing advanced discussions for possible strategic investments.
Speaker Change: This will mark the most significant capital expansion plan in our company's more than 27 year history.
Speaker Change: Included in this plan is adding significant production capacity in Texas which we expect will make us one of the largest, if not the largest, domestic producer of data center transceivers for AI applications.
Speaker Change: We continue to believe that we are poised for a sustained period of growth in both our data center and CATV businesses, and that these capital commitments will be transformational to our company as we execute on these opportunities.
Moving now to our Q1 Outlook.
Speaker Change: We expect Q1 revenue to be between $94 million and $104 million, and non-GAAP gross margin to be in the range of 29% to 30.5%.
Speaker Change: Non-GAAP net income is expected to be in the range of a loss of $3.6 million to break even and non-GAAP earnings per share between a loss of $0.07 per share and break even using a weighted average basic share count of approximately 49.6 million shares.
Speaker Change: With that, I will turn it back over to the operator for the Q&A session.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Bye.
Speaker Change: The first question comes from Tim Savigo with Northland Capital Markets. Please go ahead.
Tim Savigo: Hey good afternoon and congrats on the ramp and cable in particular in the quarter. I wanted to ask about the capacity investments. I guess 135 or so million mid-range and pretty substantial in Q4 as well.
Tim Savigo: I guess to what extent is that print I mean I imagine it's principally focused on data center but maybe you could provide some color data center versus cable looks like you're going to continue to ramp there
Tim Savigo: and within data center, could you give us an estimate of the kind of capacity you're heading towards, whether that's
Tim Savigo: revenue or you know incremental revenue capacity or unit volumes or
Tim Savigo: However, you'd like to discuss it and as you close the year, you know, what kind of annual revenue capacity are you targeting in the US?
Tim Savigo: Okay, so there's a lot embedded in there. As far as the application of the capital expenditures, it's going to be almost entirely for data center. There'll be some spending on...
Speaker Change: Unknown Speaker You know, cable TV as well, but most of that ramp has already been
Accommodated in terms of production capacity, so
Speaker Change: As far as what this would bring to us in terms of incremental capacity, it's going to be designed for production of primarily 800 gig and 1.6 terabits.
and again, mostly for 800 gig and 1.6 terabit.
Speaker Change: So let me answer the other. For the next order, manufactured in Houston, so we're getting to the 4-inch manufacturer for the EML.
and the high-power single-mode laser.
Speaker Change: For 800G or 1.6T, I did not plan to have maybe 100 more than.
Speaker Change: 120,000 or even 140,000 per month of capacity by end of this year or early next year. It's a single mode transceiver for data centers.
Thank you.
Okay, that's super helpful and kind of.
Speaker Change: A good segway to the next question, which is, Stefan, you mentioned.
Stefan: Some demand forecasts coming in from hyperscale customers for 800 gig.
Stefan: I imagine that's related to your capacity planning, but any chance you can quantify that?
Stefan: That type of demand or we should we assume it's in line with the monthly production figures that Thompson just mentioned.
Stefan: Yeah, it's in line with those production figures. I mean, obviously we're not planning on targeting our entire CapEx at one particular customer, so there's some aggregated demand across a number of different hyperscale customers, but certainly the aggregate demand is consistent with the numbers that Thompson mentioned.
Unknown Executive
Okay, I'll pass it on and maybe come back later.
Okay.
Conference Operator: Again, if you have a question, please press star, then 1. Our next question comes from Michael Genovese with Rosenblatt Securities. Please go ahead.
Unknown Speaker . .
Michael Genovese: Great. Thanks very much. I guess first question on the quantum, quantum bandwidth.
Conference Operator: to a North American cable order that you referenced in the quarter.
Michael Genovese: Just explain to us, how is that similar or different from the 1.8 gigahertz amplifiers that drove the sequential increase in the quarter? Is that a different product and a different customer or is it related?
Michael Genovese: No, it's the same. Quantum bandwidth is a suite of products that includes amplifiers and other things. This was specifically for our 1.8 gigahertz quantum bandwidth amplifier products. So, yeah, it's the same product that we were talking about earlier.
Michael Genovese: Okay, and then I guess just could you kind of give us any more color on I mean obviously the data center opportunity
is a multi-year opportunity and we're
Michael Genovese: you know, identified some targets sort of for the second half of the year. But if we think about the quarter itself, and the first quarter, you know, with three hyperscale customers that we sort of know about, just, you know,
Speaker Change: How are the quarter versus your expectations? Are things going slower in the near term or are they going according to your expectations? Just a little bit more color on data center would be helpful.
Speaker Change: I think it's pretty much in line with our expectations. I mean, we've said for pretty consistently for a while that
Speaker Change: 400 gig was going up, which it is, it's up almost 4x year over year. Meanwhile, 100 gig is gradually declining, which is what we've said for a while as well. And that 800 gig and 1.6 terabit will start ramping, I mean, 800 gig later this year, 1.6 terabits, maybe later this year, more likely 2026.
So all this is in line with what we expected.
Speaker Change: And for your 400G result in the quarter, or what 400G could be in, you know, one queue, is that gated by capacity? Or is capacity not an issue in 400G?
Speaker Change: The capacity is sort of a moving target, right? We're adding capacity as demand shows that to be prudent, right? In other words, we're not getting too far ahead on the capacity expansion plan.
Speaker Change: Okay, just last quick one for me. The 120 to 150 million CapEx target in 2025, I actually suspected that maybe it could have even been higher than that so I'm kind of wondering is that like a number that would have to be repeated in the next year or or does that get you
multiple years of revenue growth, so let's say $150,000.
Speaker Change: Let's put it this way, our hope is that we're going to continue to make sizable capital investments because that means that our revenue in the future is expected to continue to ramp.
Speaker Change: Based on what we're hearing from our data center customers, this is a multi-year upgrade cycle that they're going through with respect to their AI data centers. And to that extent, if we're participating in that, then our expectation is that we would continue to see increased demand.
Speaker Change: Not just 2025 and we're done. I can't give you any kind of guidance on what we're gonna be in 2026 in terms of CapEx, but I think it would be...
Speaker Change: A very good sign if we continue to invest, you know, substantial amounts. Well, let me say that based on the information we have from...
405 Customer
I think by the end of next few years.
The demand for the 800Z1.6T single-mode transceiver.
Speaker Change: Could be more than $200,000 per month or even $250,000 per month.
Speaker Change: I think we want to be conservative because, you know, the demand change from time to time. We will not invest until we got the commitment.
or maybe the sign coming through was caused by this.
This year I think we are very competent.
and that's why we need to speed up.
Thank you.
Thank you so much.
Transcription by CastingWords
Conference Operator: The next question comes from Simon Leopold with Raymond James. Please go ahead.
Conference Operator: Yeah, thanks. This is Jeff Kochi in for Simon. So I just wanted to hit on 400 gig for a little bit, maybe you can break out of the 14 million like how much was
The Microsoft AOC agreement, and then.
Conference Operator: you know, thinking of just about how the, maybe the front end, um, the 400 days of demand there, how, how you expect that to trend, uh, into March and, and, um, I'll follow up.
Unknown Speaker .
Speaker Change: Yeah, I can't really comment on, you know, customer-specific products and all that. That would be covered under NDA. But I can say that we've been pretty consistent that the Microsoft, you know, program would ramp later this year and that's, you know, consistent with the forecast that we're continuing to see. But with respect to exactly how much we sold this quarter, you know, we don't break that out. And I'm sorry, your second question was what?
Speaker Change: just you know the I know that that was targeted more to the back end I'm just thinking the 400 gig that's you know front more front and related
Speaker Change: or is some of the foreigner gig that you're getting the business is that should we consider that back-end and how do you expect that dynamic to trend into March? Thank you.
Thank you.
Speaker Change: Well, again, we don't get forward guidance by product line either, so I can't really comment on exactly what we're expecting. Let me say that right now we can see based on demand for one of the single mode transceiver.
Speaker Change: for maybe 2km or 10km. That's all we are adding in our capacity too, alright. Not only 800G, but that's not the majority of this year because...
Speaker Change: So basically, I would say, within a few months, I would say, I don't know.
Speaker Change: to 70,000 per month. The multi-mode, I think we are talking about maybe 120,000 per month.
Professor Wu
Speaker Change: 5, 6, 7 cousins, all right, all in US, big cousins.
What? Is it on?
Speaker Change: Maybe just clarify, I'm sorry if I miss this, but embedded within the guidance for March, where do you see, you know, like CAT TV versus data center sales? Data center...
Speaker Change: should be up, I'm assuming, and maybe some moderation in CAT TV. Thank you.
How to
Speaker Change: pretty consistent in past calls talking about how at some level
Speaker Change: Our CATV revenue is limited by the rate at which, you know, our customers can deploy the product, right? This is not like data center where...
Speaker Change: a lot of infrastructure is required to do that. So there's just a natural limit to how much of that can be.
Speaker Change: installed in any given quarter. So we expect to see, you know, kind of a plateauing in the CAPB business. And as Thompson mentioned, you know, the cable TV, I mean, excuse me, the data center business, you know, is where we expect to see most of the growth going forward.
Speaker Change: And by the way, the Q1 guidance is not limited by demand. It's because of Chinese New Year, as you know. So, just two, three weeks or even one month, including the manpower issues.
Speaker Change: So otherwise, I think the revenue will be much, much higher. So in Q1, the revenue is limited by our capacity, especially manpower.
Speaker Change: We are not a team. So that's why we are working very hard.
to cash out the demand for the customer.
Especially in detail centers.
The 100-G, 400-G.
Q2 for COPQ3
Great, thanks.
Okay.
Conference Operator: The next question comes from Dave Kang with B. Reilly Securities. Please go ahead.
Dave Kang: Thank you, good afternoon. First question is on the cable TV, you got that 52% customer, is that a Disney or can you talk more about that customer? Because it's not ATX, right?
Speaker Change: Now it's the same big customer we've had for the last few quarters in cable and it's it is a stocking distributor for cable TV products in the USA.
Unknown Speaker 00.00.00
Speaker Change: So how is that, you know, can you talk about the difference between the demand difference between your product versus say like a EAA, you know, from Harmonic and Bessinger where, you know, they're talking about, you know, slowing down where you guys seem to be.
kind of immune from that.
Speaker Change: Yeah I mean I think we've mentioned this on the last few calls but I'll kind of reiterate that. So the DAA, the element that is principally causing the DAA deployments to slow down
Speaker Change: is a remote fly module. It goes out in the node and it translates the digital input and output signals into analog signals that can be carried over the rest of the coax portion of the HSC network.
That particular device has had some challenges, okay?
Speaker Change: And so our products are downstream of that device. Right now what we're selling are the amplifier products that go downstream of the node.
So those, the upgrade of those amplifiers is independent of
Speaker Change: the DAA aspect of the network, okay? And carriers can get benefits from deploying the amplifiers independent of whether or not the node, you know, has been upgraded. And so that's what they're doing as they, you know, as they work their way through whatever the issues are with the remote PHY deployment.
Speaker Change: they're going full speed ahead on their amplifier upgrades so that when the remote PHY devices and the nodes are ready, then they'll be able to immediately or more quickly turn on DOCSIS 4.0 services.
Speaker Change: Got it. And then regarding your top customer, that Disney customer or cable TV customer, I mean, who are their major customers? I mean, do they sell to major MSOs like Charter and Comcast or any more color on their customer base?
Speaker Change: I mean, yes, they do sell to large MSOs, including the ones that you mentioned, and a variety of others.
Speaker Change: As we mentioned, the units that we have been selling are principally destined for large North American MSOs.
who are doing upgrade projects.
Speaker Change: Got it. And then I'm assuming when you talk about second half regarding 800 gig ramping in second half, I'm assuming third quarter, what's your, you know, lead time or expected lead times for 800 gig?
Is that like maybe 10 weeks or 8 weeks?
Got it. Okay. Sounds good. Thank you.
Yeah.
Conference Operator: The next question is a follow-up from Tim Savigo with Northland Capital Markets. Please go ahead.
Transcription by ESO. Translation by —
Tim Savigo: Thanks, and this kind of follows on to Thompson's comments about mid-year capacity.
Speaker Change: And so it sounds like a lot of this is going to need to happen pretty quickly. I guess that
Speaker Change: talking about the potential for a strategic investment. Seems like if that's going to happen that would need to happen pretty soon to be part of the financing or the capacity. I just want to get any
Speaker Change: color on that on any expectations you might have. Well, look, I mean, we've been adding, I mean, as you can see, our CapEx numbers are, you know, have ramped fairly dramatically over the last couple quarters already. So, you know, we're not
Speaker Change: until we get a strategic investment. What I was trying to say in our prepared remarks was simply that those discussions are ongoing and that could be a part of our financing plan.
Stefan Murry, Unknown Executive
Okay, thanks very much.
Speaker Change: And let me add something too. For the 400G multi-mode, the main result actually is not the shortage. It's AOC, but the same capacity can be used for 800G AOC, too. So if you times two, then the capacity is 240,000 per month.
Speaker Change: of Shore Reach, 120,000 per month AOC by June or July, and for both 100G and 800G, and that's based on the demand from the customer.
Speaker Change: The other is most of these new production lines will be almost fully automatic, not like 100G manufacturing lines, totally different. So we can set minimum 80% to 90% main power, and that's why we are very confident.
Weekend Manufacturer in Houston. All right, thank you.
Speaker Change: And the next question comes from Michael Genovese from Rosenblatt Securities as a follow-up. Please go ahead.
Speaker Change: Hello, Michael, you're on the podium again. Oh, sorry, I was on mute there. Um, thanks again. Last just last follow up question for me.
Speaker Change: I just want to ask directly, have you guys qualified an 800g product with any customer yet? And have you shipped any 800g revenue in the fourth quarter?
Uh,
Speaker Change: We are almost there. We shipped out a lot of the 800G, but it's down to a few hundred, a few thousand. That's called the final qualification. Besides the lab, it's more like data center qualification, something like that.
So, all of a sudden...
to more than one customer you said?
3 or 4, 4? 3 or 4, I think.
That does it all for me. Thanks again.
They are single motion zero, not multi-mode.
Conference Operator: At this time, we have no further questions and I will turn the call back over to Dr. Thompson-Lynn for closing remarks.
Conference Operator: Again, thank you for joining us today. As always, we want to extend a thank you to our investors, customers, and employees.
Conference Operator: For your continued support, as we discussed today, we believe the long-term demand driver remains strong for both our data center and CITB business, and we believe we are well positioned to catalyze on this opportunity. We look forward to seeing many of you at RFC. Thank you.
Conference Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.