Michael Hurlston, the chief executive of Lumentum Holdings, said in a Tokyo interview on Friday that the company had committed all of its optical-component production capacity through early 2029. “We are completely sold out, so there's no end in sight,” he said.
For companies building larger artificial intelligence computing systems, the components are part of the machinery needed to move data quickly across data centres. Lumentum supplies indium phosphide devices used in high-speed cloud computing and data transmission, and demand has climbed as big technology companies expand their data-centre footprint.
Hurlston said Lumentum could not meet roughly 70% of demand for some products into next year. For other products, it expected to fall short by 30% through 2028.
“We are really trying to catch up, add capacity as fast as we can, but we are very, very far behind what customers want,” Hurlston said.
The position has tightened since six months ago, when Hurlston had said the company’s capacity would be fully committed through 2028.
Lumentum has increased production at its Tokyo-area factory twelvefold over the past two years. It plans to invest at least $350 million in that site and neighbouring facilities.
The company has also added capacity at its Caswell, England facility and added a fabrication facility in Greensboro, North Carolina.
At Greensboro, Lumentum is converting gallium arsenide production lines to 6-inch Indium Phosphide lines, with production expected to begin in mid-2028. Moving Indium Phosphide lines from 3-inch to 6-inch wafers can quadruple the number of devices made on each wafer and cut chip costs by more than 60%.
Those changes take time. Building new production capacity takes three to five years for companies such as Lumentum, and significant additional supply from its new facilities may not arrive until 2029 or 2030.
The pressure comes as technology companies require faster data transmission and more network bandwidth for larger AI computing systems. Nvidia invested $2 billion in Lumentum earlier this year.
Supply of the underlying material carries another uncertainty. In February 2025, China added Indium Phosphide substrates and related materials to its export control list, requiring export licences to be assessed case by case. China accounted for approximately 69% of global refined indium production in 2025.
Hurlston had already raised the prospect of a deeper squeeze at a public event in Paris in July, when he said Indium Phosphide supply tightness could become more severe than the current memory shortage.
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