Coherent CEO Jim Anderson delivered a high-energy vision for the company’s future at its Analyst and Investor Day in New York, outlining how Coherent is positioned to dominate next-generation photonics markets. “Photonics is the future,” Anderson declared, pointing to a tectonic industry shift as electrons hit physical limits and photons take over key functions in data centers, semiconductor manufacturing, and precision industrial processes. With more than 10,000 customers, deep vertical integration, and global manufacturing at scale, Coherent is betting on optical technologies as the cornerstone of digital infrastructure.
Anderson emphasized that AI data centers are driving an exponential increase in bandwidth—up to 10x in coming years—necessitating a shift from electrical to optical links, even within the rack. Coherent expects the data center and communications market to double to over $40 billion by 2030. To capture this opportunity, Coherent is scaling its investments in key areas like co-packaged optics, pluggable transceivers, and optical interconnects. A major milestone: Coherent’s new non-mechanical, digital liquid crystal optical switch has entered production and generated its first revenue, ahead of schedule. This switch opens a $2B adjacent SAM with strong customer traction.
In industrial markets, Coherent is capitalizing on a surge in photonics content per system. Today’s smartphones, for example, require more than 40 laser-enabled steps in manufacturing—Coherent is the only vendor supplying all five laser types involved. The company also sees long-term growth from OLED display manufacturing and semiconductor equipment, both of which increasingly depend on laser precision. Around 25% of Coherent’s industrial revenue now comes from recurring services and parts, a figure expected to grow as the installed base expands.
To support growth and improve margins, Coherent is doubling down on focus and execution. The company has exited or is divesting non-core products, redirecting resources toward its highest-return segments. It has tripled indium phosphide capacity in the past year and will launch the industry’s first 6-inch InP wafer line next quarter. Coherent targets 10–15% revenue CAGR, a 42% gross margin, and operating margins above 24%—a combination Anderson says can drive long-term value creation across both core verticals.
- Coherent expects >$40B TAM in data center and communications by 2030
- AI data centers projected to grow bandwidth demand 10x, fueling optical adoption
- Scale-up (intra-rack) conversion to optics will expand optical networking footprint
- Coherent’s digital liquid crystal optical switch has entered production and revenue
- New optical switch addresses $2B market with differentiated non-mechanical design
- Industrial segment sees growing photonics content in smartphones, OLED, and semicap
- Over 40 laser steps needed to manufacture a smartphone; Coherent supplies all five types
- Tripled indium phosphide capacity; 6-inch wafer production starts next quarter
- 25% of industrial revenue is recurring (services and replacement parts)
- 60+ global production sites in 14 countries; half located in the U.S.
- 800G transceivers ramped twice as fast as 400G; 1.6T product ramp already underway
- Divesting non-core lines and redirecting 20% of R&D to core growth engines
- Long-term financial targets: 42% gross margin, 24%+ operating margin, 10–15% growth
An archived webcast of the presentation is available on the company’s Investor Relations site.
