Applied Optoelectronics Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 9, 2024

There are 8 speakers on the call.

Operator

Good day, and welcome to the Applied Optoelectronics First Quarter 2024 Financial Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ms.

Operator

Lindsey Savaris, Investor Relations for AIO. Please go ahead.

Speaker 1

Thank you. I'm Lindsay Saverise, Investor Relations for Applied Optoelectronics. I'm pleased to welcome you to AOI's Q1 2024 Financial Results Conference Call. After the market closed today, AOI issued a press release announcing its Q1 2024 financial results and provided its outlook for the Q2 of 2024. The release is also available on the company's website ata0inc.com.

Speaker 1

This call is being recorded and webcast live. A link to the recording can be found on the Investor Relations section of the AOI website and will be archived for 1 year. Joining us on today's call is Doctor. Thompson Lin, AOI's Founder, Chairman and CEO and Doctor. Stephen Murray, AOI's Chief Financial Officer and Chief Strategy Officer.

Speaker 1

Thompson will give an overview of AOI's Q1 results, and Stefan will provide financial details and the outlook for the Q2 of 2024. A question and answer session will follow our prepared remarks. Before we begin, I would like to remind you to review AOI's Safe Harbor statement. On today's call, management will make forward looking statements. These forward looking statements involve risks and uncertainties as well as assumptions and current expectations, which could cause the company's actual results, levels of activity, performance or achievements of the company or its industry to differ materially from those expressed or implied in such forward looking statements.

Speaker 1

In some cases, you can identify forward looking statements by terminology such as believe, forecasts, anticipates, estimates, suggests, intends, predicts, expects, plans, may, should, could, would, will, potential or thinks, or by the negative of those terms or other similar expressions that convey uncertainty of future events or outcomes. The company has based these forward looking statements on its current expectations, assumptions, estimates and projections. While the company believes these expectations, assumptions, estimates and projections are reasonable, Such forward looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the company's control. Forward looking statements also include statements regarding management's beliefs and expectations related to the expansion of the reach of our products into new markets customer responses to our innovation, as well as statements regarding the company's outlook for the Q2 of 2024. Except as required by law, we assume no obligation to update forward looking statements for any reason after the date of this earnings call to conform these statements to actual results or to changes in the company's expectations.

Speaker 1

More information about other risks that may impact the company's business are set forth in the Risk Factors section of the company's reports on file with the SEC, including the company's annual report on Form 10 ks and the company's quarterly reports on Form 10 Q. Also, all financial results and other financial measures discussed today are on a non GAAP basis unless specifically noted otherwise. Non GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A

Speaker 2

discussion of

Speaker 3

why we

Speaker 1

present non GAAP financial measures, as well as a discussion of why we present non GAAP financial measures are included in our earnings press release that is available on our website. Before moving to the financial results, I'd like to announce that AOI Management will virtually participate at the Needham Technology Media and Consumer Conference on May 16. And I'd like to note that the date of our Q2 2024 earnings call is currently scheduled for August 8, 2024. Now I would like to turn the call over to Doctor. Thompson Lin, Applied Optoelectronics' Founder, Chairman and CEO.

Speaker 1

Thompson?

Speaker 4

Thank you, Lindsey. Thank you for joining our call today. Our revenue and non GAAP gross margin for the Q4 came in below our expectations and our non GAAP EPS was in line with our expectations despite the slow start to the year. Based on our current forecast and very constructive customer interactions, we remain very positive on improvement in the second half of the year. During the Q4, we delivered revenue of 40 $700,000 which was just below guidance range of $41,000,000 to $46,000,000 We delivered non GAAP gross margin of 18.9%, which was below our guidance range of 21% to 23%, mainly driven by difference in product mix.

Speaker 4

Our non GAAP loss per share was $0.31 per share, which was within our guidance range of a loss of $0.28 to a loss of $0.33 per share. Total revenue for our datacenter product of $29,000,000 was up 42% year over year and was down 35% sequentially. RUBELIN for our 1D product increased 33% year over year and revenue for our 4 hundred and eighty product more than doubled in the same period. Total revenue in our CATV segment was $8,700,000 which was down 69% year over year and down 30% sequentially, largely driven by continued generous low sales of DOCSIS 3.1 equipment as the industry prepares to transition to DOCSIS 4.0. With that, I will turn the call over to Stefan to review the details of our Q1 performance and outlook for Q2.

Speaker 4

Stefan? Thank you, Thompson.

Speaker 3

As Thompson mentioned, our first quarter revenue and non GAAP gross margin came in below our expectations, while our non GAAP EPS was in line with our expectations. Based on our current forecast and very constructive customer interactions, we remain very positive on improvements in the second half of the year. We believe that the long term demand drivers remain strong for both our data center and CATV businesses and we believe we are well positioned to capitalize on these opportunities. Looking to the back half of the year, there are a few key items to note that give us a basis for our optimistic outlook despite the slow start to the year. The first is that we have begun to receive forecasted orders for the VCSEL based 400 gs active optical cables for which Microsoft provided development funding last year.

Speaker 3

While the pace of product adoption has been somewhat slower than we anticipated, we believe that the fact that we are now receiving forecast for these products for delivery in Q3 is a significant step in seeing meaningful business improvement. The second is that follow on projects to our 400 gs AOC program, specifically for our 800 gs and 1.6 terabit products have been fast tracked with our customers as they address an acceleration in demand for infrastructure around AI. Are being asked to compress the time from development to scale production as much as possible in order to meet this accelerated demand. The third is that we have continued to experience significant traction and continue to have meaningful discussions with multiple large data center customers, some of which are new customers to AOI or customers that we have not worked with in many years, specifically for our 400 gs, 800 gs and 1.6 terabit products. We expect 1 or more of these customers will begin to contribute meaningfully to revenue starting in Q3.

Speaker 3

And lastly, we believe that the transition to DOCSIS 4.0 will begin to take place in Q3 and that our products are aptly designed for the deployment of amplifiers other network elements required for DOCSIS 4.0. We shipped our 1st fully production ready DOCSIS 4.0 amplifier samples to a major customer last week and the feedback while early has been exceedingly positive. With the improvement we expect in the second half, we continue to believe that 2024 can be our 1st full year of non GAAP profitability since 2018. Turning to the quarter. Our total revenue for the Q1 was $40,700,000 which was down 23% year over year and 33% sequentially and which was just below our guidance range of $41,000,000 to $46,000,000 As we had discussed on our prior earnings call, the softness in Q1 was largely due to the combined effects of the Lunar New Year holiday in our Asian factories along with some price reductions which took effect in the quarter.

Speaker 3

During the Q1, 71% of our revenue was from our data center products, 22% was from our CATV products with the remaining 7% from FTTH, Telecom and Other. Turning to our data center business. Our Q1 data center revenue came in at $29,000,000 which increased 42% year over year and was down 35% sequentially. In the Q1, 73% of our data center revenue was from our 100 gs products, 17% was from our 200 gs and 400 gs transceiver products and 3% was from our 40 gs transceiver products. As we have discussed on several prior earnings calls, we signed 2 agreements with Microsoft in 2023 for the development of 400 gs products and beyond.

Speaker 3

This included a development program to make next generation lasers for its data center and for the development of its 400 gs and next generation active optical cables. While not guaranteed, we continue to believe that the revenue opportunity for our 400 gs and 800 gs products could be greater and a longer duration than the revenue contribution we saw from this customer during the peak of the 40 gs product cycle, which suggests that revenue from these products may exceed $300,000,000 over the several years of these build outs. We began shipments late last year and have begun to receive new forecasted orders, which we expect to contribute to revenue later in Q2 and we believe will continue to ramp strongly in Q3 and Q4. Also as a reminder, in 2023, we shipped samples of our 800 gs products to 3 different data center customers and had received initial positive feedback. As we discussed above, we are in detailed discussions with several hyperscale data center operators about ramping production for our 800 gs and 1.6 terabit products starting in Q3 for 800 gs and early Q1 of 2025 for the 1.6 terabit products.

Speaker 3

These dates are several months earlier than we had previously been requested to deliver and we believe the acceleration in the schedule is being driven by faster deployment of technology needed by AI workflows. Turning to our CATV business. CATV revenue in the Q1 was $8,700,000 which was down 69% year over year and down 30% sequentially, largely driven by generally slow sales of DOCSIS 3.1 equipment as the industry prepares to transition to DOCSIS 4.0. Looking forward, we continue to expect that our near term CATV business will be down compared to the historic highs we saw in 2021 2022 as the MSOs transition to next generation architecture. We anticipate this transition to DOCSIS 4.0 will begin to take place in Q3 and we are optimistic about the second half of the year and twenty twenty five.

Speaker 3

As a reminder, we shipped initial test samples of our 1.8 gigahertz amplifier products to 2 major MSOs in Q4 of last year and we received encouraging feedback on their performance and pricing. We are pleased to report that we shipped final qualification units of various amplifiers last week and we would expect revenue to begin as early as the end of Q2 with significant ramp in the second half as we increase manufacturing capacity for these new products. As Thompson mentioned, we will continue to carefully monitor MSO plans to upgrade to DOCSIS 4.0 networks and we continue to believe AOI is a leader in technologies that will enable DOCSIS 4.0 and that we have the right portfolio in place to address our customers' needs. Now turning to our Telecom segment. Revenue from our Telecom products of $2,300,000 was down 39% year over year and down 19% sequentially, largely driven by ongoing softness in 5 gs demand, particularly in China.

Speaker 3

Looking ahead, we continue to expect telecom sales to fluctuate from quarter to quarter. For the Q1, our top 10 customers represented 92% of revenue, down from 93% in Q1 of last year. We had 2 greater than 10% customers, 1 in the data center market and 1 in the CATV market, which contributed 62% 21% of our total revenue respectively. In Q1, we generated non GAAP gross margin of 18.9%, which was below our guidance range of 21% to 23% and was down from 36.4% in Q4 of 2023 and down from 23.2% in Q1 of 2023. The decrease in gross margin was driven mainly by product mix and some price reductions, which took effect during the quarter.

Speaker 3

Looking ahead, we expect improving gross margins throughout the year as product mix improves in our data center business and CATV revenue begins to ramp. We remain committed to the long term goal of returning gross margin to around 40% and believe that this goal is achievable. Total non GAAP operating expenses in the Q1 were $24,800,000 or 61 percent of revenue, which compared to 19.6 $1,000,000 or 36.9 percent of revenue in Q1 of the prior year due to higher R

Speaker 4

and D spend.

Speaker 3

Looking ahead, we continue to expect non GAAP operating expenses to range from $24,000,000 to $26,000,000 per quarter to account for the acceleration of R and D expenses to improve time to market for our 800 gs and 1.6 terabit data center products. Non GAAP operating loss in the Q1 was $17,100,000 compared to an operating loss of $7,200,000 in Q1 in the prior year. GAAP net loss for Q1 was $23,200,000 or a loss of $0.60 per basic share compared with the GAAP net loss of $16,300,000 or a loss of $0.56 per basic share in Q1 of 2023. On a non GAAP basis, net loss for Q1 was $12,000,000 or $0.31 per share, which was within our guidance range of a loss of $10,900,000 to a loss of $12,600,000 and in line with our guidance range of a loss per share in the range of $0.28 to a loss of $0.33 per basic share. This compares to a net loss of $7,100,000 or a loss of $0.25 per basic share in Q1 of the prior year.

Speaker 3

Fully diluted shares outstanding used for computing the earnings per share in Q1 were $38,400,000 Turning now to the balance sheet. We ended the Q1 with $17,400,000 in total cash, cash equivalents, short term investments and restricted cash. This compares with $55,100,000 at the end of the 4th quarter. This cash balance reflects a few slow paying AR receipts totaling about $11,000,000 which were subsequently received in the 1st 2 weeks of Q2. Also note that we used almost $4,000,000 in cash to reduce debt during the quarter.

Speaker 3

We ended the quarter with total debt excluding convertible debt of $34,800,000 compared to $38,700,000 at the end of last quarter. As of March 31, we had $54,300,000 in inventory compared to $63,900,000 at the end of Q4. We made a total of $7,800,000 in capital investments in the Q1, which was mainly used for production and R and D equipment. Moving now to our Q2 outlook. We expect Q2 revenue to be between $41,500,000 $46,500,000 and non GAAP gross margin to be in the range of 25.5 percent to 27.5 percent.

Speaker 3

Non GAAP net loss is expected to be in the range of 11.6 $1,000,000 to $13,500,000 and non GAAP loss per share between $0.29 per basic share and $0.34 per basic share using a weighted average basic share count of approximately 39,200,000 shares. Looking ahead, as the widespread adoption of generative AI continues to place increased demands on our customer data centers, we believe that these customers will ultimately need to deploy more infrastructure to meet these needs, which will provide a long tailwind of demand for the optical industry. Our U. S.-based production ability combined with our automated manufacturing capabilities and experience

Speaker 4

puts us in

Speaker 3

a unique competitive position to address these needs. Further, as our CATV customers transition to next generation architecture and implement new technologies like DOCSIS 4.0, we believe that we have positioned ourselves as a leader in technologies that will enable DOCSIS 4.0 and we are confident that we have the right product portfolio, team and strategy in place to capitalize on this upcoming transition. We have spent several years developing these products and we expect that they will go to market in the next few months. In sum, we believe that the long term demand drivers remain strong for both our data center and CATV businesses and we believe we are well positioned to benefit from these growing long term trends. With that, I will turn it back over to the operator for Q and A session.

Speaker 3

Operator?

Operator

Thank you. We will now begin the question and answer session. And the first question will come from Simon Leopold with Raymond James. Please go ahead.

Speaker 5

Thanks for taking the question. A couple of quick ones maybe. I think on the prior conference call, you had given us some indication that you thought the full year revenue could exceed $300,000,000 Given the slower start to the year, it does sound like you still expect a much stronger second half, but how do you feel about that full year $300,000,000 target?

Speaker 3

Well, what we've said is that we think we can be profitable for the year. So if you can run the numbers on that, we don't give guidance annual guidance really. So I wouldn't say we're pulling back on anything. It's obviously going to be a little more challenging considering where we started the year, but I think it's still very achievable, let's say that. Okay.

Speaker 5

And then, you did give us some indication of the operating expense expectations for the year at that $24,000,000 to $26,000,000 per quarter. And I think we were anticipating more of a $22,000,000 to $24,000,000 per quarter and that may simply be just extrapolating too much from the Q1 forecast. Did something change in terms of your expectation of what you need to spend on sales and marketing and R and D?

Speaker 3

As we noted in our prepared remarks, we've increased our R and D spend a little bit, to because we're getting as I talked about, we're getting customers that are pulling in their request for product development months ahead of schedule. And so we need to spend additional R and D. I wouldn't say it's additional overall, but we're spending it quicker than we otherwise would. So it does represent a slight increase to our R and D. Sales and marketing, not too increase in sales and marketing.

Speaker 5

Thanks. And then I remember at our meeting at OFC, you had talked about sort of a product roadmap going from the VCSEL based solutions to VCSELs and EMLs and ramping up to higher per channel speeds. Could you give us an overview of the roadmap you expect in terms of launches over the next year plus?

Speaker 3

Right. So the VCSEL based products are already in production. And we'll likely add higher speed lane VCSELs to that portfolio next year. With respect to the EML based products, we have some products in production now, the higher speed data center products with EMLs will go into production in late Q3, early Q4.

Speaker 5

And your what was your 400 gig in the quarter? I missed that.

Speaker 3

400 gig in the quarter, let me get you that number. 17% of the data center revenue. So, dollars 29,000,000, 17% of that.

Speaker 5

Okay. And that was just 400 gig not 400 gig?

Speaker 3

Over doubling.

Operator

Say that again? That's a

Speaker 3

little over doubling compared to that almost well, it was slightly over doubling from same period last year.

Speaker 5

Great. Thank you very much for taking the questions. Appreciate it.

Speaker 3

Thanks, Tom.

Operator

The next question will come from Michael Genovese with Rosenblatt Securities. Please go ahead.

Speaker 2

Great. Thanks. I guess, just start with I wanted to ask some questions about Microsoft. Like if you had any more color on why you think that it's going slower than initially expected? But then secondly, how do you expect orders to trend in the second quarter?

Speaker 2

Do you see orders in the month of June being above the month of May? Is there any visibility to that? And then finally, it sounds like your comments on the overall size of this of $300,000,000 plus have maybe gotten a little bit more bullish, but maybe that's because you've added 800 gs to it. So if you could help us understand that as well. Thank you.

Speaker 3

Sure. I'm sorry, what? I missed that.

Speaker 6

I'm sorry,

Speaker 2

I was just reminding the first one was why the delay.

Speaker 3

Yes. I wouldn't really say it's an overall delay. If my prepared remarks sounded that way, that's not what I was trying to say. There was a slight delay in one particular program, which really just reflects the fact that it's a new product and sometimes new product launches just take little longer than expected. There's nothing particular that I can point to with respect to that.

Speaker 3

It is positive that we're getting new updated forecasts now that would indicate shipments beginning later in Q2 and then ramping quickly in Q3 and Q4. So that's all positive. I wouldn't read much into the delay itself. Overall, the revenue in our data center business is about where we expected it to be in Q2. So there's not really a significant change from our earlier thinking.

Speaker 3

That small delay in the business from Microsoft is being more than compensated by other data center customers. So it's not anything overall that I'm trying to point to there, just that one particular product that's got somewhat of a delay. Your second question had to do with the $300,000,000 target and whether that represents a change. No, fundamentally, other than that, we mentioned that we're having to pull in 800 gig and 1.6 terabits faster. Now 1.6 terabits won't be a factor this year, but it will be early next year.

Speaker 3

But the acceleration in 800 gig is certainly helpful to try to meet that goal. And then I'm sorry, I forgot your third question there. What was it?

Speaker 2

Well, I'll tie that in with my next and last question. So but it was about the orders. If for instance, you think that if there's a reason to think as you're seeing these forecasts that for instance June would be up from May, which is up from April, if you're seeing that kind of trend at this customer. But I might as well just ask, I mean, you said 1Q data center revenues were about where you expected them to be. How do you see them trending in 2Q and 3Q, if you could address that?

Speaker 2

And then that would be it.

Speaker 3

I want to be clear. Yes. Well, first of all, maybe I misspoke earlier. Q1 and Q2 data center numbers are about what we expected them to be. Cable TV in Q2 is coming in a little lighter than what we had expected.

Speaker 3

And that explains to the extent that we didn't give guidance until now in Q2, but to the extent that there was some change in our thinking, it had to do with cable TV, not data center. Data center overall is doing almost actually, it's slightly ahead of plan compared to where we thought it was going to be. I mentioned earlier, Microsoft had a delay in one product, but the rest of them are going fine and that slight delay in that one product was more than compensated for in Q2 by growth in other customers. So with respect to

Speaker 4

so this is Thompson, let me say, I think overall for data center, I think we feel more positive right now compared to few months ago. The main reason is 800 gs. Right now, I think at least we can see several big customers, especially 2 hyperscale data customers are pulling the schedule for 800. Cable TV, cable TV is quite slow because all customers are working for 1.0 edge products. So usually the delay in cable TV is not surprising as you can see from other companies.

Speaker 3

Michael, I just want to touch on your last question there. I'll try to answer it directly. Yes, are we seeing a trend of more orders kind of month by month? And the answer is yes, as I mentioned earlier. That one program, for example, for Microsoft that's somewhat delayed, we do expect it to pick up towards the end of this quarter.

Speaker 3

So that would mean June months would be bigger than May and that was certainly bigger than April. So we are seeing that trend with that product. But overall, we expect to see that trend somewhat throughout the quarter. Although, again, I would say, for the most part, the data center business outside some of these new programs and especially the 800 gig products later in the year is it's relatively consistent business at this point.

Speaker 2

Okay, great. I'll pass it on now. I might come back later or say my questions for offline. Thank you.

Speaker 3

Okay. Sounds great. Thanks.

Operator

The next question will come from Tim Savageaux with Northland Capital Markets. Please go ahead. Tim, your line may be muted.

Speaker 3

Yes. Sorry about that.

Speaker 6

I'm here. Can you hear me?

Speaker 3

Yes, we can hear you. Hello.

Speaker 6

All right, great. Hello. Yes, I'd say with the new OpEx forecast, it seems like maybe in something reasonably over $300,000,000 is what you would need to get you there. And so that's a pretty significant ramp in the second half, almost 3x over the first. Although we've seen that recently, couple of different places, most recently at Coherent.

Speaker 6

So I guess as you look at that ramp and then the 800 gig opportunities in particular, I'm hoping you might be able to size those for us in a fashion maybe similar or analogous to how you've been talking about the Microsoft 400 gig opportunity? That's one question. And you've talked about new data center customers or some old data center customers coming back. Should we assume this discussion around 800 gig and 1.60 also applies to Microsoft or is it more focused on the new players?

Speaker 3

No. I mean, we specifically maybe it wasn't totally clear from the prepared remarks, but it's our existing customers that we have now plus the new customers for those 800 gig and 1.6 terabit products. So Microsoft clearly is would be included in the category of existing customers. And as far as the size of the market, what we're seeing right now is that 800 gig is several times as large as the 400 gig opportunity. So it represents a dramatic expansion.

Speaker 3

And that's within the same customer. If you add on the new customers that we're referring to, the market size there gets commensurately larger.

Speaker 6

Great. So as you look at that data center ramp into the second half, I mean, would you imagine between your current 400 gig would you imagine that to be, I don't know, half 800 gig or how are you looking at it now? And to what extent are you looking at a material cable TV networking contribution in the second half as part of that ramp?

Speaker 3

Yes. I think that's the key point really is the cable TV has been kind of to the extent that there's been a disappointment Q2, it's mainly that cable TV is ramping slower than we expected. And that's just as Thompson mentioned, some of that's par for the course. I mean, we're optimistic that the MSOs would move a little faster into 1.8, but it's taken a little longer to get through the qualification, get all the revenue ramp, but it also help us improve the gross margin, which is significantly higher in the cable TV segment than it is in data center.

Speaker 4

And I can add something. So for the 800 gs business, we can see I think we are discussing with at least 3, 4 customers, for sure including Microsoft, I think this I would say, more than $500,000,000 $600,000,000 next year for AOI, just 8 100 gs.

Speaker 6

Sorry. Thompson, does that in the aggregate or what kind of time period or maybe we can or can we put some more brackets around that $500,000,000 $600,000,000 I think I heard you say?

Speaker 4

I think we are doing qualification. I think we should get some volume order late Q3. So it's about the next year, Q1 to Q4 next year, I would say, just energy only is more than $5,000,000 or even $600,000,000 for AOI based on this And that was going

Speaker 6

to be my last question actually in terms of your the nature of these detailed discussions and kind of is that around qualification or where do we stand on that front?

Speaker 3

No, it's around

Speaker 6

Are we talking about putting the dotting the I's and crossing the T's on contracts, a little more color there?

Speaker 3

Well, I'm not sure to what extent the contracts really come into play there. What we're talking about now is agreement. Planning around deployment scenarios, when they're going to need products, how much product they're going to need, pricing, that sort of thing.

Speaker 6

Okay. Thanks.

Speaker 3

The commentary from the customers is how fast can you deliver x amount of product for us, right? It's about how fast can we be ready to deploy or to manufacture the products that they need to deploy.

Speaker 4

And the very important key, as I say, is AOIs has been invest few $100,000,000 in the test as in more than 10 year for automation, including we develop a lot of our own equipment for automations. So I think we are doing a Phase 2, maybe I would say we would do Phase 2 light Phase 3 light by end of this year and then do a Phase 3 fully mentioned in Q1, Q2 next year. So we can do 800 gs manufacturing in Houston with, I would say, similar or a bit higher cost than in Taiwan and China. I think that's very attractive to the customer, including the big customer we used to have several years ago, then they are coming back. Number 2, the key the laser is a key component, key technology.

Speaker 4

The 100 gs, 200 gs, the VCSEL, the EML, and I think we can AR can make oral laser and use it. This is also very I think the key factor for the customer. As in for sure is not only the cost, the key is the risk management.

Speaker 6

Great. Thanks very much.

Operator

Our next question will come from Dave Kang with B. Riley FBR. Please go ahead.

Speaker 7

Thank you. Good afternoon. So regarding that 800 gig, first question is, do you have 200 gig per lane VCSELs and EML? So what's the status on that?

Speaker 4

We will have the volume effect will be more like Q1 next year. Right now, it's going to go through the whole R and D especially, I think customers are very concerned about the quality. But that's for 1.60, all right, not for 800 gs. And this still the plan. And I'm talking about the 800 gs, I'm talking about the opportunity for Airline next year is 500 to 600 meter higher, decimal mode, okay?

Speaker 4

It's like 2 kilometer high. It's not a short reach. It's not ALC. So it's pretty the highest ASP, high cost margin product, okay? The 1.60, as of next year, it's more like will be the multi mall and single mall together for shorter distance, maybe 5 millimeter and below.

Speaker 4

But we will have all of them producing.

Speaker 7

Got it. And then sticking with 800 gig, I think you said something like maybe 2 customers that will ramp 3rd quarter. Just wondering if you've been qualified or that's POs already?

Speaker 4

The revenue more like Q3 or Q4. We are doing a quite vacation. So it's the single mode, 2 kilometer and higher, including the DIA and 2xFR4. So, I would say more than 2 customers. For hyperscale, I would say maybe 3 customers including the there are some other smaller customers.

Speaker 4

The volume manufacturer, for sure, we're going to push in Q3, so we are trying our best to catch up the volume. I would say Q4 for sure. Q3 schedule is a bit tight, maybe September.

Speaker 7

Got it. And then, you regarding your press release at the beginning of OFC about that 800 gig AOC that you jointly developed with Credo. Can you just give more color exactly what they provide and what you guys provide? And where are we as far as sampling or even going to production?

Speaker 3

So Criteo makes a DSP and we make active optical cable around it. And we haven't commented on any production schedules for it. Okay. Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Doctor. Thomas Lin. Please go ahead, sir.

Speaker 4

Again, thank you for joining us today. As always, we want to extend a thank you to our investors, customers and employees for your continued support. As we discussed today, we believe the long term demand driver remains strong for both our data center and CATV business, and we believe we are well positioned to capitalize on this opportunity. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Remove Ads
Powered by Quartr
Earnings Conference Call
Applied Optoelectronics Q1 2024
00:00 / 00:00
Remove Ads