Coherent Corp. · NYSE:COHR
Coherent — Investor Day (September 2023)
66 slides from Coherent's investor day presentation, Sep 19, 2023
Slide 1: Communications Market Overview – Markets Day
Exhibit 99.1 COMMUNICATIONS MARKET OVERVIEW Markets Day September 19, 2023 Paul Silverstein Vice President, Investor Relations & Corporate Communications Copyright 2023, Coherent. All rights reserved. 1
Slide 2: Host
HOST Paul Silverstein Vice President, Investor Relations & Corporate Communications 2 Copyright 2023, Coherent. All rights reserved.
Slide 3: Speakers
SPEAKERS Dr. Julie Sheridan Eng Dr. Lee Xu Dr. Beck Mason Paul Silverstein Dr. Sanjai Chief Technology Officer Executive Vice President, Executive Vice President, Vice President, Parthasarathi Telecommunications Datacom Transceivers Investor Relations & Chief Marketing Officer Corporate Communicatio
Slide 4: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements relating to future events and expectations, including our expectations (i) for our future financial and operational results (including expectations for future growth); (ii) regarding capital expenditures and the results
Slide 5: Our Markets, Communications Market
OUR MARKETS, COMMUNICATIONS MARKET Dr. Sanjai Parthasarathi, Chief Marketing Officer 5 Copyright 2023, Coherent. All rights reserved.
Slide 6: All Our Markets Are Healthy and Growing Over the Long Term
ALL OUR MARKETS ARE HEALTHY AND GROWING OVER THE LONG TERM Industrial Communications Electronics Instrumentation TAM: $22B TAM: $23B TAM: $14B TAM: $5B CAGR: 9% CAGR: 16% CAGR: 20% CAGR: 8% Combined CY23 TAM of $64B growing to $124B within five years 6 Copyright 2023, Coherent. All rights reserved.
Slide 7: Our Market Groups and Verticals
OUR MARKET GROUPS AND VERTICALS Industrial Communications § Precision Manufacturing§ Datacom Components, Lasers and Systems Lasers and Transceivers § Semiconductor Capital Equipment§ Telecom Optics, Materials, and Lasers From Materials to Systems § Display Capital Equipment Optics, Materials and Las
Slide 8: FY23: A Year of Records
FY23: A YEAR OF RECORDS Industrial FY 2023 Revenue $502M (+11% YOY) Semiconductor $5,160M Capital Equipment (+7% YOY) Communications Electronics $1,299M (+4% YOY) $457M (+99% YOY) Datacom Consumer Electronics $995M (+9% YOY) $168M (+111% YoY) Automotive & Other Telecom 8 Copyright 2023, Coherent. Al
Slide 9: Communications Market Drivers and Dynamics
COMMUNICATIONS MARKET DRIVERS AND DYNAMICS Optics contribution to hardware spend increases with data rate 100% 20% 50% 90% 80% 10 Tbps 1 Tbps 50% 10% Full parallax High-definition 6G holographic display 1G/10G 100G 400G Platform Pluggable Optics 9 Copyright 2023, Coherent. All rights reserved. Hardw
Slide 10: Infrastructure Spend
INFRASTRUCTURE SPEND Infrastructure Spending $ 1.1T Spent in 2022 ** Our SAM 2023 2028 CAGR Datacom $9B $16B 12% Telecom $8B $15B 13% Data Center Capex by Segment * Source: * Dell’Oro – Data Center Capex forecast report-Jul 2023, ** LightCounting – Mega DataCenter report – Jul 2023, 10 Copyright 202
Slide 11: Datacom and Telecom Verticals Defined
DATACOM AND TELECOM VERTICALS DEFINED DATACOM TELECOM Data Center Satcom Data Center Interconnect (DCI) Long-Haul & Ultra Long- Haul Storage Area Local Area Network (SAN) Network (LAN) NIC/CNA Cards Metro Aggregation HBA Submarine Ethernet Switch Router Ethernet Ethernet Switch Router Switch Router
Slide 12: AI Connectivity – Datacom Opportunity
AI CONNECTIVITY – DATACOM OPPORTUNITY AI systems integrated into data centers Time to reach one million users 5 days Level 1: Optical Interconnects, up to 500 m 2.5 months 10 months 2 years 3.5 years § Mainstream networking topology is giving way to a new topology to accommodate AI systems § Both Le
Slide 13: AI Has Rapidly Emerged as a Key Catalyst of Our Long Term Growth
AI HAS RAPIDLY EMERGED AS A KEY CATALYST OF OUR LONG TERM GROWTH Datacom Transceivers § Generative AI trend § Datacom Transceivers for AI Only: 47% CAGR (’23 - ‘28) § All Datacom Transceivers: 18% CAGR § Driven primarily by 800G, 1.6T and 3.2T Source: LightCounting July ‘23 and internal estimates 13
Slide 14: Datacom Transceiver Global Market
DATACOM TRANSCEIVER GLOBAL MARKET $M $1.3 billion Coherent Corp. sales in $10,000 datacom in FY23 $8,000 3.2T 1.6T 200G 800G $6,000 and higher data-rate transceivers 400G represent >65% of Coherent 200G Corp. total transceiver revenue in 100G $4,000 Q4 FY23 50G 40G $2,000 800G and higher data-rate $
Slide 15: Our Datacom Transceiver Market Opportunity (AI and Traditional)
OUR DATACOM TRANSCEIVER MARKET OPPORTUNITY (AI AND TRADITIONAL) CY23 Transceiver Opportunity ($B) CY28 Transceiver Opportunity ($B) VCSEL AI DML - Other $0.3 6% $0.6 6% VCSEL AI $1.6 14% EML - Other DML - Other $1.0 9% VCSEL - Other $1.6 29% DML $1.5 27% $0.6 DML VCSEL VCSEL - Other VCSEL $1.6 $1.8
Slide 16: Our Datacom Laser Market Opportunity (AI and Traditional)
OUR DATACOM LASER MARKET OPPORTUNITY (AI AND TRADITIONAL) CY23 Datacom Laser Opportunity ($M) CY28 Datacom Laser Opportunity ($M) VCSEL AI DML - Other $25 5% $68 6% DML AI VCSEL AI $0 0% $135 11% EML - Other DML - Other $122 10% VCSEL - Other $169 30% $124 22% DML $68 VCSEL VCSEL - Other VCSEL DML $
Slide 17: Vertical Integration: Transceiver
VERTICAL INTEGRATION: TRANSCEIVER Transceiver Laser TOSA Pluggable DSP IC (TIA, LD, CDR) PIC ROSA Optical Assembly Board-Mount Polarization Beam Splitter Garnet Lenses Mux/DeMux High Speed Detectors Co-packaged Isolators 17 Copyright 2023, Coherent. All rights reserved.
Slide 18: Communications: Broadest, Vertically Integrated, End to End Portfolio
COMMUNICATIONS: BROADEST, VERTICALLY INTEGRATED, END TO END PORTFOLIO Long Haul & Ultra-Long Haul Submarine Link Line cards Transceivers Coherent transceivers Gimbals Line Systems Amplifiers Transceivers Lasers Lasers Materials Integrated Module High Speed Detectors Optical Channel Monitor (OCM) Wav
Slide 19: ROADM Traditional Networks vs. Disaggregated Networks
ROADM TRADITIONAL NETWORKS VS. DISAGGREGATED NETWORKS Disaggregated Networks Traditional Networks Disaggregated Equipment Integrated Equipment • Network management developed by equipment vendor • Network management developed by cloud providers • ROADM vendors assigned network regions • Standard inte
Slide 20: Market Growth of Pluggable Coherent Transceivers
MARKET GROWTH OF PLUGGABLE COHERENT TRANSCEIVERS Pluggable coherent transceivers ($M) $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 FY24 FY25 FY26 FY27 FY28 FY29* 100Gbps 200Gbps 400Gbps 800 Gbps 120 km 800ZR/ZR+ Source: LightCounting, Cignal AI, Internal Estimates 20 Copyright 2023, Coherent. All righ
Slide 21: Coherent Market Share and Mind Share Leadership
COHERENT MARKET SHARE AND MIND SHARE LEADERSHIP Recognition Of Leadership Across Multiple Verticals* Datacom Telecom Industrial Consumer #1 #2 #1 #1 $5.2B Telecom market $13.0B Components market $5.9B Datacom market Lumentum Coherent (II-VI) Other… Other 20.9% Other O-Net 18.1% Coherent (II-VI) 24.9
Slide 22: Our Datacom Business
OUR DATACOM BUSINESS Dr. Lee Xu, Executive Vice President, Datacom Transceivers 22 Copyright 2023, Coherent. All rights reserved.
Slide 23: Datacom
DATACOM § Our business history, status and strengths § AI-related products, differentiation, and growth 23 Copyright 2023, Coherent. All rights reserved. 23
Slide 24: Datacom Transceiver Revenue Growth
DATACOM TRANSCEIVER REVENUE GROWTH Datacenter Hyperscaler Enterprise AI (100G) (200/400G) (10G) 800G/1.6T/3.2T FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Fiscal Years 24 Copyright 2023, Coherent. All rights reserved.
Slide 25: Coherent's Datacom Transceiver Business Strengths and Eco-System
COHERENT’S DATACOM TRANSCEIVER BUSINESS STRENGTHS AND ECO-SYSTEM Representative Customers* Our Main Competition Our Key Suppliers * Many of our customers (including many of our largest customers) require us to maintain confidentiality of our business relationship, in part by not disclosing their nam
Slide 26: Broadest Transceiver Portfolio in the Industry
BROADEST TRANSCEIVER PORTFOLIO IN THE INDUSTRY Some Representative Transceiver BU Products • All major protocols: Ethernet, Fiber Channel, 100M 1G 10G 25G SFP SFF SFP+ BiDi SFP28 Infiniband, and SONET • All speeds: 100M to 800G 25G (1.6T coming soon) 10G 14G 40G SFP28 T-XFP Endurance QSFP+ AOC • All
Slide 27: High-Volume, Highly Sophisticated Manufacturing
HIGH-VOLUME, HIGHLY SOPHISTICATED MANUFACTURING Ipoh, Malaysia Wuxi, China 1,530K sq. ft manufacturing space 5,000 employees ISO 9001 and 14001 certified Ipoh, Malaysia 640K sq. ft manufacturing space 3,500 employees Geographic diversity of high volume transceiver assembly manufacturing improves ass
Slide 28: Our Automation, Test Development, and Process Development
OUR AUTOMATION, TEST DEVELOPMENT, AND PROCESS DEVELOPMENT § Strong process development capabilities to realize advanced optical designs (many technologies are industry first) § In-house automation stations for Coherent specific technologies and processes (1000+ stations developed) § In-house develop
Slide 29: Laser Chip Fabs in Zurich; Stockholm; Sherman, TX; Fremont, CA
LASER CHIP FABS IN ZURICH; STOCKHOLM; SHERMAN, TX; FREMONT, CA DFBs, Hi-Power EMLs, CW Lasers DFB-MZs Fremont, CA Stockholm Wuxi, China Ipoh, Malaysia 6” GaAs, 6” GaAs and VCSELs InP fabs Zurich Sherman,TX Coherent’s vertical integration 29 Copyright 2023, Coherent. All rights reserved. Copyright 20
Slide 30: 800G Products for AI in FY24
800G PRODUCTS FOR AI IN FY24 • FY1Q23: First shipments • FY4Q23: Design wins for every flavor of 800G products with all major volume customers • FY24: Substantial orders on hand; steep production and shipment ramp 800G product ramp-up trend in FY24 Q1 Q2 Q3 Q4 30 30 Copyright 2023, Coherent. All rig
Slide 31: Datacom Transceiver High Level Roadmap
DATACOM TRANSCEIVER HIGH LEVEL ROADMAP CY2023 CY2024 CY2025 CY2026 CY2027 50Tb/s Switch 800G Transceivers Beta GA 100G/lane Electrical & Optical High Volume Production 100G/lane Electrical, 200G/lane Optical Linear Pluggable Optics (Direct Drive) 100Tb/s Switch 1.6T & 3.2T Transceivers 200Tb/s Switc
Slide 32: Development of 1.6T/3.2T Laser/Modulator Options
DEVELOPMENT OF 1.6T/3.2T LASER/MODULATOR OPTIONS • EML is the technology choice for most customers • DFB-MZ (in development) is needed for 2-6 km • Silicon Photonics (SiPh) could address shorter distances (up to 500 m). Coherent’s internally-designed SiPh has demonstrated good performance for 200G/l
Slide 33: Our Leadership Position in the Next Five Years
OUR LEADERSHIP POSITION IN THE NEXT FIVE YEARS 200G per Lane • Will lead with new products for 800G/1.6T (800G, 1.6T, 3.2T) 800G LW & SW (100G per Lane) • Will differentiate leveraging our laser technologies and transceiver designs Better than industry average gross margins, despite bargaining power
Slide 34: Summary
SUMMARY § AI is an extraordinary opportunity for which we are well-prepared • Products: We have a broad portfolio of 800G products and a strong technology roadmap • Opportunity: Demand is already several hundreds of millions dollars and growing • Production: Ramping throughout FY24 § We expect AI to
Slide 35: Our Telecom Business
OUR TELECOM BUSINESS Dr. Beck Mason, Executive Vice President, Telecommunications 35 Copyright 2023, Coherent. All rights reserved.
Slide 36: Our Heritage
OUR HERITAGE 30 YEARS 1990 Foundational TEC Passive Faraday Pump Laser, WSS Optical Transceivers InP Lasers IPs Technology Optical Rotators Amplifier and Platforms and Solutions Signal Monitoring Transmission Components Technology 36 Copyright 2023, Coherent. All rights reserved. 36
Slide 37: Communications Networks
COMMUNICATIONS NETWORKS Edge Core Access Networks Transport Networks Datacenters •Metro • Video streaming •5G Wireless • Regional • Cloud services • Fiber-to-the-home • Long-haul • Social media • Broadband cable • Submarine • Big data/AI/ML • Low-orbit satellites 37 Copyright 2023, Coherent. All rig
Slide 38: Broad Portfolio of Telecom Products
BROAD PORTFOLIO OF TELECOM PRODUCTS We have the broadest portfolio of optical components We are leaders in the fundamental enabling and modules for transport applications technologies for optical transmission • Subsystems are more differentiated and enable us to sell on • IC and photonic chip techno
Slide 39: Telecom Market
TELECOM MARKET 29.3 Billion 5.3 Billion Networked devices Internet users Coherent’s Telecom Revenue ~$1B FY23 Telecom market growth Internet traffic growth 14% 24% per year per year for the next 5 years Source: Cisco Annual Internet Report (2018-2023) White Paper 39 Copyright 2023, Coherent. All rig
Slide 40: Coherent Transceiver Technology
COHERENT TRANSCEIVER TECHNOLOGY • Fully automated high volume manufacturing • Module design including embedded FW development • Optical subassembly design and manufacturing • High speed IC and coherent DSP development • Photonic chip design in InP and SiP and high volume manufacturing 800G InP fab i
Slide 41: DSPs: Key Building Blocks in Coherent Transceivers
DSPs: KEY BUILDING BLOCKS IN COHERENT TRANSCEIVERS DSP Digital Signal Processor • DSP converts digital data from a switch or router into the complex analog modulation signals • Converts the received signal at the other end of the link back into digital data and compensates for any signal impairments
Slide 42: 100G Coherent Transceivers
100G COHERENT TRANSCEIVERS 100ZR QSFP28 DCO Purpose-built power- • World’s first Digital Coherent Optics (DCO) module in Steelerton™ DSP optimized tunable laser QSFP28 form factor purpose-built for small size and low • 100G capacity, 300 km reach power consumption • Based on Coherent 7 nm digital si
Slide 43: Integrated Subsystems
INTEGRATED SUBSYSTEMS Capabilities Solutions Module Integration, Algorithms & Firmware ROADM Linecards Optical Channel Wavelength Optical Amplifier Mux/Demux Modules OTDR Modules Monitor Selective Switch Device Packaging 980nm & 14xx Pump Lasers Isolators & Mux/Demux Tunable Filters Variable Optical
Slide 44: Pluggable Optical Line Subsystem (POLS)
PLUGGABLE OPTICAL LINE SUBSYSTEM (POLS) • Bi-directional, dual erbium-doped fiber amplifier (EDFA) in QSFP pluggable module • Booster amplifier for transmit direction • Pre-amplifier for receive direction • External DWDM Mux/Demux cable assembly. Applications QSFP Dual EDFA module • IP-over-DWDM poi
Slide 45: Telecom Technology Evolution
TELECOM TECHNOLOGY EVOLUTION Wavelength Selective Amplifier Optical Channel Monitoring Pump Laser Switch 2x C&L bands channels Higher power pump Enables a single device to The highest power per capability to deliver more cover both C&L bands pump emitter efficient amplifiers together 45 Copyright 20
Slide 46: Manufacturing Advantage
MANUFACTURING ADVANTAGE Shenzhen Fuzhou Wuxi China China China Geographic Ipoh Philippines Malaysia Diversity Vietnam Thailand Others Pump Laser Photonic components Transceiver Passive optics Amplifiers line cards Other subsystem 46 Copyright 2023, Coherent. All rights reserved.
Slide 47: Assembly Operations and Automation
ASSEMBLY OPERATIONS AND AUTOMATION • Internally developed automation • Assembly and test automation • Consistent product quality • Better manufacturing efficiency and cost Reliability Example Liquid crystal WSS platform A mean time to failure +4000 years Based on 8 billion cumulative hours of device
Slide 48: How We Win
HOW WE WIN Telecom components Telecom Modules Telecom Subsystems Terrestrial pump lasers EDFA Linecards Submarine pump lasers High port count WSS Node-on-a-blade Sbbmarine components Submarine WSS Pluggable optical line systems Specialty fiber Edge WSS Optical monitoring system Thermoelectric cooler
Slide 49: Enabling Technologies
ENABLING TECHNOLOGIES Dr. Julie Sheridan Eng, Chief Technology Officer 49 Copyright 2023, Coherent. All rights reserved.
Slide 50: Components for AI/ML
COMPONENTS FOR AI/ML Artificial Intelligence and Machine Learning is accelerating the pace of innovation in optical components 50 Copyright 2023, Coherent. All rights reserved.
Slide 51: Our Vertical Integration Is a Differentiator
OUR VERTICAL INTEGRATION IN LASERS, DETECTORS, INTEGRATED CIRCUITS, AND PASSIVE OPTICS IS A DIFFERENTIATOR Lasers Detectors Integrated Circuits Passive Optical Components 51 Copyright 2023, Coherent. All rights reserved.
Slide 52: Lasers for 100G and 200G/Lane
LASERS FOR 100G AND 200G/LANE Short-Reach Mid-Reach Up to 10 km < 100 m 500 m to 2 km 8x100G for 800G 8x100G for 800G 8x100G for 800G 16x100G for 1.6T 4x200G for 800G 4x200G for 800G 8x200G for 1.6T 8x200G for 1.6T 8x200G for 1.6T Gallium Arsenide Indium Phosphide, Indium Phosphide Silicon Photonics
Slide 53: Gallium Arsenide Platform for Short-Reach Transceivers
GALLIUM ARSENIDE PLATFORM FOR SHORT-REACH TRANSCEIVERS Feb. 2023 - Coherent introduces our 100G per lane VCSELs to support 400G and 800G transceivers Aug. 2023 – Coherent announces shipment of 200B VCSEL emitters Vertically integrated 6” GaAs platform Sherman, TX 53 Copyright 2023, Coherent. All rig
Slide 54: Indium Phosphide Technology Platform for Long-Reach Transceivers
INDIUM PHOSPHIDE TECHNOLOGY PLATFORM FOR LONG-REACH TRANSCEIVERS Electro-Absorption Modulated Laser (EML) Continuous Wave Laser (CW Laser) InP-based Photodetectors Indium phosphide wafer fab in Fremont, CA 54 Copyright 2023, Coherent. All rights reserved.
Slide 55: Interoperation Between Silicon Photonics-Based and EML-Based 800G DR8
INTEROPERATION BETWEEN SILICON PHOTONICS-BASED 800G DR8 AND EML-BASED 800G DR8 • Interoperation between EML-based DR8 and SiPh- based DR8 demonstrated in ECOC2022 • Silicon Photonics-based DR8 • Coherent-designed highly integrated Silicon Photonics chip, manufactured at Tier 1 silicon foundry • Cohe
Slide 56: EMLs: 200G Transmission
EMLs: 200G TRANSMISSION • Electro-Absorption Modulated Lasers (EMLs) Demonstrated at ECOC2022 are used for 100G/lane today • Extension to 200G/lane demonstrated at Evaluation Board ECOC2022 Arbitrary Semtech Coherent Waveform • Monolithically integrated O-band DFB laser and an 200G EML 200 Gb/s Gene
Slide 57: 200G PAM4 Mach-Zehnder Modulated Laser Technology
200G PAM4 MACH-ZEHNDER MODULATED LASER TECHNOLOGY • Supports 1.6T 10 km transceivers • Uncooled operation for shorter links • 200G PAM4 per wavelength • LAN-WDM, CWDM channel plans • High performance: • High speed 112 Gbaud • High output power: 8.5 dBm • Extinction ratio: 7dB OMA • Low noise: -147 d
Slide 58: Feb. 2022: The Industry's First 400G ZR+ in QSFP-DD Form Factor
FEB. 2022: THE INDUSTRY’S FIRST 400G ZR+ IN QSFP-DD FORM FACTOR Network engineer at Windstream Wholesale network lab holds a pluggable 400G ZR+ transceiver from Coherent Photo courtesy of Windstream Wholesale 58 Copyright 2023, Coherent. All rights reserved.
Slide 59: Coherent Transceiver Technology for Access Networks
COHERENT TRANSCEIVER TECHNOLOGY FOR ACCESS NETWORKS 100ZR QSFP-28 DCO Purpose-built power- Steelerton™ DSP optimized tunable laser purpose-built for small size and low power consumption Highly integrated silicon photonics PIC 59 Copyright 2023, Coherent. All rights reserved.
Slide 60: Integrated Circuits
INTEGRATED CIRCUITS Trans-impedance Digital Signal Laser driver amplifier (TIA) Processor (DSP) § In-house integrated circuit design team for laser drivers, TIAs, and DSPs § ICs manufactured in tier 1 silicon foundries 60 Copy Copyright right 2023, 2023, Coherent Coherent.. All All right rights s re
Slide 61: Internal Components Support All Architectures
INTERNAL COMPONENTS SUPPORT ALL ARCHITECTURES Traditional retimed pluggable Linear Pluggable Optics Near-Packaged Optics (NPO) optics, including Ethernet, (LPO) and Half-Linear and Co-Packaged Optics Infiniband, and proprietary Pluggable optics (HALO) (CPO) links such as NVIDIA’s NVLink 61 Copyright
Slide 62: #1 in Transceivers for Two Decades
#1 IN TRANSCEIVERS FOR TWO DECADES Deep expertise in internal components including • Gallium Arsenide and Indium Phosphide semiconductor lasers • Silicon Photonics •IC’s • Passive Optical Components 62 Copy Copyright right 2023, 2023, Coherent Coherent.. All All right rights s reserved. reserved.
Slide 63: Transformations in the Optical Network
TRANSFORMATIONS IN THE OPTICAL NETWORK Protocol agnostic 100G 800G • Ethernet Per Lane Transceiver • Infiniband • NVLink 200G 1.6T Per Lane Transceiver 63 Copyright 2023, Coherent. All rights reserved.
Slide 64: A Leader and Innovator in Transceivers Helping to Bring Forth the Power of AI and ML
A LEADER AND INNOVATOR IN TRANSCEIVERS HELPING TO BRING FORTH THE POWER OF AI AND ML 64 Copyright 2023, Coherent. All rights reserved.
Slide 65: Q&A
Q&A Dr. Julie Sheridan Eng Dr. Lee Xu Dr. Beck Mason Paul Silverstein Dr. Sanjai Chief Technology Officer Executive Vice President, Executive Vice President, Vice President, Parthasarathi Telecommunications Datacom Transceivers Investor Relations & Chief Marketing Officer Corporate Communications Co
Slide 66: C@HERENT
C@HERENT