Lumentum CEO: The company's optical devices are sold out until 2029, with a demand gap of up to 70% for some products.

Lumentum Holdings, an optical component manufacturer invested in by Nvidia, is facing a massive production shortfall—its CEO stated that the company's products are fully sold out through early 2029, with robust AI data center demand leaving it struggling to keep up.

Michael Hurlston, CEO of Lumentum, revealed in a Bloomberg interview in Tokyo on Friday that for some products, around 70% of next year's demand cannot be met, and for others, there will still be a 30% shortfall in demand by 2028. Just half a year ago, he claimed the company's production capacity was expected to be sold out by 2028—a timeline that has now moved forward by nearly a year. "We are completely sold out with no end in sight," Hurlston told Bloomberg.

The severe supply shortage is directly impacting related tech stocks and the investment logic for AI infrastructure. On average, analysts expect Lumentum's sales this year to more than double.

To cope with runaway orders, Lumentum has already ramped up production at its critical plant in the Greater Tokyo Area to 12 times its previous capacity over the past two years and plans to invest at least $350 million in the facility and adjacent sites. The company has also completed an expansion at its Caswell plant in the UK.

However, expanding optical component production capacity is not an overnight process. Hurlston pointed out that for companies like Lumentum, building new production capability takes three to five years. To mitigate capital expenditure risks, hyperscale cloud computing companies have committed to providing support. "These cloud giants are willing to put up the capital," he said.

Regarding the expansion of its product lines, Hurlston indicated that the company may need to make acquisitions to supplement its existing capabilities. "I think within the next year or so, we hope to add new product capabilities on top of what we already have," he said.

Lumentum's core products are indium phosphide components, which are critical materials for high-speed cloud computing and data transmission. Earlier this year, Nvidia invested $2 billion each in Lumentum and competitor Coherent Corp., underscoring major AI chip manufacturers' strategic focus on the optical interconnect supply chain.

Silicon photonics technology is seen as a key direction for next-generation data center interconnects—using light instead of copper cables to transmit data, enabling even higher transmission speeds for AI hardware while also reducing system heat dissipation and energy consumption. Lumentum gained access to relevant technology through its 2018 acquisition of Oclaro Inc., which inherited Hitachi's optical research legacy; Oclaro’s Sagamihara plant is now one of the world's most advanced indium phosphide component production bases.