“AMZN s broader strategy of going cheap and in-house has compounded the problem.”
Amazon's strategy of developing Trainium in-house has compounded problems, with Anthropic finding Trainium ineffective, prompting Amazon to invest heavily in OpenAI to fill idle Trainium capacity.
“Microsoft and Amazon made what we believe will prove to be a costly strategic error by opting for lower-cost alternatives... this penny-wise, pound-foolish approach led to predictable consequences.”
Marvell's custom ASIC partnerships for Microsoft's Maia and Amazon's Trainium have resulted in postponed deployment schedules, lackluster system performance, and lower effective performance per dollar, indicating they are not effective bottleneck solvers.
“AVGO s design partnership model... has proven to be the winning template.”
Broadcom's design partnership model for custom ASICs has proven to be the winning template, with an enormous pipeline underpinning its thesis as a secular winner, addressing the compute bottleneck caused by NVDA's Blackwell delays.
“The causer is the InP supply chain small-diameter wafers from suppliers like AXTI... that cannot scale to meet explosive 1.6T transceiver demand.”
AXT Inc. is a supplier of small-diameter InP wafers, which are identified as a bottleneck causer due to low yields and long lead times, making it unable to scale for 1.6T transceiver demand and vulnerable to SiPho solutions.
“The biggest winner from this SiPho transition is Tower Semiconductor (TSEM).”
Tower Semiconductor is identified as the biggest winner from the SiPho transition, operating the industry's most mature and highest-performance SiPho process node, uniquely qualified at 1.6T, and planning significant capacity expansion.
“Transceiver makers who partnered early with TSEM on SiPho 1.6T most notably Innolight... are positioned as downstream winners with a meaningful time-to-market advantage.”
Innolight, as the world's largest optical transceiver producer, partnered early with TSEM on SiPho 1.6T, granting it a meaningful time-to-market advantage as SiPho resolves the optical interconnect bottleneck.
“The bottleneck has localized to the EML... fabricated on Indium Phosphide (InP) wafers... The supply response is severely constrained by InP physics and economics.”
Lumentum is a major producer of EML lasers, which are fabricated on Indium Phosphide (InP) wafers, a supply chain bottleneck severely constrained by physics and economics, making it vulnerable to the SiPho transition.
“This represents a fundamental architectural shift an implicit concession that copper, even with AEC, cannot scale to next-generation bandwidth densities.”
The industry is undergoing a fundamental architectural shift towards optical interconnects, implicitly conceding that copper, even with AECs supplied by Credo, cannot scale to meet next-generation bandwidth demands.