Supply restrictions across the semiconductor supply chain are expected to support elevated pricing and capacity expansion in the sector, according to industry executives speaking at Jefferies’ annual Semiconductor Conference. The event, held this week, drew nearly 100 companies from the semiconductor and hardware industries.
Coherent Corp. reported demand for its products at "extraordinary levels," with supply likely to remain constrained for at least 12 to 18 months. The company indicated it may need to expand capacity beyond existing plans to quadruple production. The optical content opportunity in Near-Package Optics was described as comparable to that of Co-Packaged Optics, highlighting continued investment in high-performance interconnect solutions.
Transceiver and optical technology shipments are projected to reach 100 million units by 2027, with 1.6T transceivers leading growth. Demand for 800G products remains robust, though the widespread adoption of co-packaged optics has been delayed until at least the second half of 2028, potentially extending into 2029 or 2030. Industry participants cited testing, reliability, supply chain, and standardization challenges as key obstacles.
Nvidia Corp. has begun securing critical inputs such as substrates and DRAM, evaluating alternatives including 8-layer HBM4E, 12-layer HBM4, and 8-layer HBM4 configurations for its Rubin Ultra platform. Advanced Micro Devices Inc. reported securing substrate capacity during the pandemic and anticipates year-over-year growth in units and average selling prices tied to its Venice processors on the N2 process technology. Intel Corp. faces substrate constraints but noted demand for its Clearwater Forest processors exceeding expectations, while Granite Rapids maintains higher ASPs despite fewer cores than competitors.
In the automotive segment, demand showed modest improvement, particularly in China and electric vehicle applications, though Tier 1 supplier inventories remain low with limited signs of replenishment. The data center segment continues to drive recovery in the analog market, while wafer-level burn-in adoption is expanding. Aehr Test Systems reported growth in its backlog, and Cohu Inc. is tracking its sales funnel by program rather than account.
