Applied Optoelectronics Q4 2024 Earnings Call Transcript

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February 26, 2025

There are 8 speakers on the call.

Operator

Good afternoon. I will be your conference operator. At this time, I would like to welcome everyone to Applied Optoelectronics Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Please note that this call is being recorded. I would now like to turn the call over to Lindsey Savaris, Investor Relations for AOI. Ms. Savaris, you may begin.

Speaker 1

Thank you. I'm Lindsey Savaris, Investor Relations for Applied Optoelectronics. I am pleased to welcome you to AOI's Fourth Quarter and Full Year twenty twenty four Financial Results Conference Call. After the market closed today, AOI issued a press release announcing its fourth quarter and full year twenty twenty four financial results and provided its outlook for the first quarter of twenty twenty five. The release is also available on the company's website at aoinc.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 one year. Joining us on today's call is Doctor. Thompson Lind, AOI's Founder, Chairman and CEO and Doctor. Stefan Murray, AOI's Chief Financial Officer and Chief Strategy Officer.

Speaker 1

Thompson will give an overview of AOI's Q4 results and Stefan will provide financial details and the outlook for the first quarter of twenty twenty five. 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 believes, 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 its products into new markets and customer responses to its innovations as well as statements regarding the company's outlook for the first quarter of twenty twenty five. Except as required by law, AOI assumes no obligation to update these 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 AOI's reports on file with the SEC, including the company's annual report on Form 10 ks and 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 reconciliation between our GAAP and non GAAP measures, as well as a discussion of why we present non GAAP financial measures are included in the company's earnings press release that is available on AOI's website. Before moving to the financial results, I'd like to note that AOI management is attending the Susquehanna Annual Technology Conference virtually on Friday, February 28.

Speaker 1

Management will host an investor session at OFC on Tuesday, April 1, in San Francisco. This discussion will be webcast live and a link to the webcast will be available on the Investor Relations section of the AOI website. We would also like to note that the date of AOI's first quarter twenty twenty five earnings call is currently scheduled for 05/08/2025. Now, I would like to turn the call over to Doctor. Thompson Lin, AOI's Founder, Chairman and CEO.

Speaker 1

Thompson?

Speaker 2

Thank you, Lindsey, and thank you for joining our call today. During the fourth quarter, we delivered revenue of $100,000,000 which was in line with our guidance range of $94,000,000 to $104,000,000 We recorded non GAAP gross margin of 28.9% which was in line with our guidance range of 27.5% to 29.5%. All non GAAP loss per share of $0.02 was in line with our guidance range of a loss of $0.04 to earnings of $0.04 per share. Total revenue for our datacenter products of $44,200,000 was essentially flat year over year and was up 8% sequentially. Revenue for our four energy products increased 40% year over year and 70% sequentially.

Speaker 2

The growth was primarily driven by increased adoption of 400 gs products by our data center customers along with new customer that we began shipping to during the years. Total revenue in our CATV segment was $52,200,000 which increased more than four times year over year and more than doubled sequentially, largely driven by shipment of our 1.8 GHz amplified for one of our major MSO customers. As we have discussed on our prior earning calls, our MSO customers are in the process of upgrading their outside trend networks so that they can support higher bandwidth in the return path direction and eventually enable DOSIS four point zero. We are pleased to announce that during the quarter, we received a substantial order for our quantum bandwidth networking products from a top North American cable operator. This order is for products that began shipping this month.

Speaker 2

With that, I will turn the call over to Stephen to review the details of our Q4 performance and outlook for Q1. Stephen?

Speaker 3

Thank you, Thompson. We're pleased to end the year on a high note, driven by strength in both our data center and CATV businesses and with solid momentum heading into 2025. As Thompson mentioned, our Q4 results were in line with our expectations. We delivered revenue of $100,000,000 which was in line with our guidance range of $94,000,000 to $104,000,000 We recorded non GAAP gross margin of 28.9%, which was in line with our guidance range of 27.5% to 29.5%. And lastly, our non GAAP loss per share of $0.02 was within our guidance range of a loss of $0.04 to earnings of $0.04 per share.

Speaker 3

During the fourth quarter, we continued to execute on many of the initiatives that we laid out last year. In our data center business, on our last few calls, we discussed how we had begun to receive orders for 400 gs products from another large hyperscale customer. In line with our expectations, we continue to see increasing orders for 400 gs products, both from long term hyperscale customers, as well as from this new hyperscaler that we've been talking about for the last several quarters. We continued to make good progress on our 800 gs products with customers beginning to give us clear demand forecasts, which indicate ramping demand beginning in the second half of twenty twenty five in line with our expectations. In our CATV business, as Thompson mentioned, we received a substantial order for our quantum bandwidth networking products from a top North American cable operator.

Speaker 3

These products began to ship this month and we expect additional orders throughout the year based on forecasts we have received from this customer. We are encouraged by the demand that we are seeing for our CATV products and are very excited to announce that our next gen quantum bandwidth amplifiers have already begun to be deployed by a major North American MSO as part of its publicly announced network upgrade project. Lastly, during the quarter, we took steps to expand our production capabilities. We have been retrofitting our facility in Sugar Land, Texas to accommodate new automated production equipment, which we expect to begin to receive next month. This equipment will be used for the production of both 400 gs and 800 gs transceiver products.

Speaker 3

We also signed an agreement to lease an additional building in Taiwan, which we are outfitting in order to increase production of our data center and CATV products there. Turning to our fourth quarter results. Our total revenue was $100,000,000 which was up 66% year over year and up 54% sequentially and was in line with our guidance range of $94,000,000 to $104,000,000 During the fourth quarter, '40 '4 percent of revenue was from data center products, 52% was from CATV products with the remaining 4% from FTTH, telecom and other. In our data center business, Q4 revenue came in at $44,200,000 which was essentially flat year over year and increased 8% sequentially. The sequential increase was due to shipments to existing customers along with the new hyperscale data center customer that we've talked about for the last several quarters.

Speaker 3

In the fourth quarter, sixty one percent of data center revenue was from 100 gs products, 32% was from 200 gs and 400 gs transceiver products and 8% was from 40 gs transceiver products. As our data center customers work on building out their next generation AI focused data center architectures, we remain active in our 800 gsification efforts with several hyperscale customers. During the quarter, we received the first significant demand forecast from one of our hyperscale customers that bolsters our previously held expectation of a second half twenty twenty five ramp in August gs sales. In our CATV business, with the explosive growth of data consumption and rising user expectations, we are already being recognized by cable operators as a preferred partner to ensure that these upgrades minimize cable subscribers network interruptions and also optimize performance. As a result, CATV revenue in the fourth quarter was $52,200,000 which was up more than four times year over year and more than doubled sequentially.

Speaker 3

This significant increase is due to the ramp in orders for our 1.8 gigahertz amplifier products. We continue to believe our CATV revenue will ramp further in Q1 and will remain elevated throughout 2025. Now turning to our Telecom segment. Revenue from our telecom products of $3,500,000 was up 26% year over year and up 25% sequentially. Looking ahead, we continue to expect telecom sales to fluctuate from quarter to quarter.

Speaker 3

For the fourth quarter, our top 10 customers represented 97% of revenue, up from 95% in Q4 of last year. We had three greater than 10% customers, two in the data center market, which contributed 3111% of total revenue respectively and one in the CATV market, which contributed 52% of total revenue. In Q4, we generated non GAAP gross margin of 28.9%, which was within our guidance range of 27.5% to 29.5 and was up from 25% in Q3 of twenty twenty four and down from 36.4% in Q4 of twenty twenty three. The sequential increase in our gross margin was driven primarily by our favorable product mix, including growth in our CATV revenue. Looking ahead, we continue to expect that our gross margins will improve as we see the impact of manufacturing efficiencies in our CATV production and improving product mix.

Speaker 3

We remain committed to our long term goal of returning our non GAAP gross margin to around 40% and continue to believe that this goal is achievable. Total non GAAP operating expenses in the fourth quarter were $31,500,000 or 31.4% of revenue, which compared to $21,600,000 or 35.7% of revenue in Q4 of the prior year, primarily due to increased R and D spending in 800 gs, 1.6 terabit and quantum bandwidth products. Looking ahead, we expect non GAAP operating expenses to increase slightly next quarter and range from $32,000,000 to $33,000,000 In 2025, we anticipate modest additional increase bearing with quarter by quarter fluctuations, mainly in R and D expenditures. Non GAAP operating loss in the fourth quarter was $2,500,000 compared to an operating income of $400,000 in Q4 of the prior year. GAAP net loss for Q4 was $119,700,000 or a loss of $2.6 per basic share compared with a GAAP net loss of $13,900,000 or a loss of $0.38 per basic share in Q4 of twenty twenty three.

Speaker 3

Our GAAP net loss in the fourth quarter of twenty twenty four included a one time charge of $112,000,000 related to the exchange of our convertible notes in Q4. On a non GAAP basis, net loss for Q4 was $1,000,000 or $0.02 per share, which compared to our guidance range of a loss of $1,900,000 to income of $1,700,000 or loss per share in the range of $0.04 to earnings of $0.04 per basic share. This compares to a non GAAP net income of $1,600,000

Speaker 2

or $0.04

Speaker 3

per basic share in Q4 of the prior year. The basic shares outstanding used for computing the earnings per share in Q4 were $46,100,000 dollars Turning now to the balance sheet. We ended the fourth quarter with $79,100,000 in total cash, cash equivalents, short term investments and restricted cash. This compares with $41,400,000 at the end of the third quarter of twenty four. We ended the quarter with total debt excluding convertible debt of $46,000,000 compared to $39,400,000 at the end of last quarter.

Speaker 3

As of December 31, we had $88,100,000 in inventory, which compared to $64,400,000 at the end of Q3. The increase in inventory is primarily for raw materials purchased for customer orders. During the quarter, we raised $53,900,000 net of costs and fees on our previously announced at the market program. We made a total of $25,700,000 in capital investments in the fourth quarter, which was mainly used for manufacturing capacity expansion for our 400 gs and 800 gs transceiver products. This brings our total CapEx for the year to 48,800,000 which was up compared to 2023 of $12,600,000 reflecting higher capital needs as we expand production to accommodate increased demand.

Speaker 3

Going forward, we expect to make sizable CapEx investments over the next several quarters as we prepare for increased 400 gs, 800 gs and 1.6 terabit data center product production in 2025. For the year, we expect between $120,000,000 and $150,000,000 in total CapEx. We expect to finance these investments through a combination of cash on hand, cash generated from operations and some equity sales, including ongoing advanced discussions for possible strategic investments. This will mark the most significant capital expansion plan in our company's more than twenty seven year history. Included in this plan is adding significant production capacity in Texas, which we expect will make us one of the largest, if not the largest domestic producer of data center transceivers for AI applications.

Speaker 3

We continue to believe that we are poised for a sustained period of growth in both our data center and CATV businesses and that these capital commitments will be transformational to our company as we execute on these opportunities. Moving now to our Q1 outlook. We expect Q1 revenue to be between $94,000,000 and $104,000,000 and non GAAP gross margin to be in the range of 29% to 30.5%. Non GAAP net income is expected to be in the range of a loss of $3,600,000 to breakeven and non GAAP earnings per share between a loss of $0.07 per share and breakeven using a weighted average basic share count of approximately 49,600,000.0 shares. With that, I will turn it back over to the operator for the Q and A session.

Speaker 3

Operator?

Operator

The first question comes from Tim Savago with Northland Capital Markets. Please go ahead.

Speaker 4

Hey, good afternoon and congrats on the ramp in cable in particular in the quarter. I wanted to ask about the capacity investments, I guess $135,000,000 or so mid range and pretty substantial in Q4 as well. I guess to what extent is that I mean, I imagine it's principally focused on data center, but maybe you could provide some color data center versus cable, because it looks like you're going to continue to ramp there. And within data center, could you give us an estimate of the kind of capacity you're heading towards, whether that's revenue or incremental revenue capacity or unit volumes or however you'd like to discuss it? And as you close the year, what kind of annual revenue capacity are you targeting in The U.

Speaker 4

S?

Speaker 3

Okay. So there's a lot embedded in there. As far as the application of the capital expenditures, it's going to be almost entirely for data center. There'll be some spending cable TV as well, but most of that ramp has already been accommodated in terms of production capacity. So as far as what this would bring to us in terms of incremental capacity, it's going to be designed for production of primarily 800 gig and 1.6 terabits.

Speaker 3

We're still working with our customers and other related parties to figure out exactly how much of that capacity is going to be built in The U. S. Versus other locations. So I can't answer that question directly, but it's going to be substantially targeted at U. S.

Speaker 3

Investment. And again, mostly for 800 gig and 1.6 terabit.

Speaker 2

So let me answer the other. So for the laser, the manufacturer in Houston, so we're getting to the four inch manufacturer for the EML and the high power signal more laser. For A100Z1.6T as in our print to have maybe 100 more than 120,000 or even 140,000 per month of capacity by end of this year or over the next years. There's a single mode transceiver for data center.

Speaker 4

Okay. That's super helpful and kind of a good segue to the next question, which is, Stefan, you mentioned some demand forecasts coming in from hyperscale customers for 800 gig. I imagine that's related to your capacity planning, but any chance you can quantify that type of demand or should we assume it's in line with the monthly production figures that Thompson just mentioned?

Speaker 3

Yes, it's in line with those production figures. I mean, obviously, we're not planning on targeting our entire CapEx at one particular customer. So there's some aggregated demand across a number of different hyperscale customers, but certainly the aggregate demand is consistent with the numbers that Thompson mentioned.

Speaker 4

Okay. I'll pass it on to me to come back later.

Operator

Our next question comes from Michael Genovese with Rosenblatt Securities. Please go ahead.

Speaker 5

Great. Thanks very much. I guess, first question on the quantum bandwidth to a North American cable order that you referenced in the quarter. Just explain to us how is that similar or different from the 1.8 gigahertz amplifiers that drove the sequential increase in the quarter? Is Is that a different product and a different customer or is it related?

Speaker 3

No, it's the same. Quantum bandwidth is a suite of products that includes amplifiers and other things. This was specifically for our 1.8 gigahertz quantum bandwidth amplifier products. So yes, it's the same product that we were talking about earlier.

Speaker 5

Okay. And then I guess just could you kind of give us any more color on I mean obviously the data center opportunity is a multi year opportunity and we're identified some targets sort of for the second half of the year. But if we think about the quarter itself and the first quarter with three hyperscale customers that we sort of know about, just how is the quarter versus your expectations? Are things going slower in the near term? Or are they going according to your expectations?

Speaker 5

Just a little bit more color on data center would be helpful.

Speaker 3

I think it's pretty much in line with our expectations. I mean, we've said for pretty consistently for a while that 400 gig was going up, which it is. It's up almost 4x year over year. Meanwhile, 100 gig is gradually declining, which is what we've said for a while as well. And that 800 gig and 1.6 terabit will start ramping.

Speaker 3

I mean, 800 gig later this year, 1.6 terabits maybe later this year, more likely 2026. So all this is in line with what we've expected.

Speaker 5

And for your 400 gs result in the quarter, or what 400 gs could be in 1Q, is that gated by capacity or is capacity not an issue in 400 gs?

Speaker 3

The capacity is sort of a moving target, right? We're adding capacity as demand shows that to be prudent, right? In other words, we're not getting too far ahead on the capacity expansion plan. So there's a number of different products that go into the 400 gig mix. Some of those were at capacity, others were a little below, but in general, we're trying to keep capacity in line with demand.

Speaker 5

Okay. And then just last quick one for me. The $120,000,000 to $150,000,000 CapEx target in 2025, I actually suspected that maybe it could have even been higher than that. So I'm kind of wondering is that like a number that would have to be repeated in the next year or does that get you multiple years of revenue growth for one, let's say 01/1950?

Speaker 3

Let's put it this way. Our hope is that we're going to continue to make sizable capital investments because that means that our revenue in the future is expected to continue to ramp, which is what I think based on what we're hearing from our data center customers, this is a multi year upgrade cycle that they're going through with respect to their AI data centers. And to that extent, if we're participating in that, then our expectation is that we would consider continue to see increased demand, not just 2025 and we're done. So I can't give you any kind of guidance on what we're going to be in 2026 in terms of CapEx. But I think it would be a very good sign if we continue to invest substantial amounts.

Speaker 2

Well, let me say that based on the information we have from four or five customers. I think by end of next year's the demand for the 800Z1.6T single mode transceiver

Speaker 6

will be

Speaker 2

more than 200,000 per month or even 250,000 per month. But I think we want it to be conservative because the demand change from time to time, we will not invest until we got the commitment or maybe the same contract with customers. But this year, I think we are very competent, the demand there. And that's why we need to speed up the investment, especially in Houston. I think really we need to make in the transceiver in Houston because I think that's required by the customers.

Speaker 2

All right?

Speaker 5

Okay. Thanks so much.

Operator

The next question comes from Simon Leopold with Raymond James. Please go ahead.

Speaker 7

Yes, thanks. This is Jeff Koji in for Simon.

Speaker 2

So I just wanted to

Speaker 7

hit on 400 gig for a little bit. Maybe you could break out of the $14,000,000 like how much was the Microsoft AOC agreement? And then thinking just about how the maybe the front end, I mean the 400 gig demand there, how you expect that to trend into March?

Speaker 5

And I'll follow-up.

Speaker 3

Yes. I can't really comment on customer specific products and all that, that would be covered under NDA. But I can say that we've been pretty consistent that the Microsoft program would ramp later this year and that's consistent with the forecast that we're continuing to see. But with respect to exactly how much we sold this quarter, we don't break that out. And I'm sorry, your second question was what?

Speaker 6

Just the I know that

Speaker 7

that was targeted more to the back end. I'm just thinking the 400 gig that's front more front end related. Or is some of the 400 gig that you're getting the business, should we consider that back end? And how do you expect that dynamic to trend into March? Thank you.

Speaker 3

Well, again, we don't give forward guidance by product line either, so I can't really comment on exactly what we're expecting. Let me say,

Speaker 2

right now, we can see based on demand for 400D single mode transceiver for maybe two kilometer or 10 kilometer. That's why we are adding our capacity to, all right, not only 800D, but based on the majority of this year because so basically, I would say, within few months, I would say, I don't know, by June or July, as in the single malt capacity, we need to be maybe, I would say, minimum 50,000 to 70,000 per month. The multi malt, I think that maybe 120,000 per month, maybe by similar times, all right? June, July, August, just based on the demand we see, all right? That's how far I can say.

Speaker 2

But we have many customers, okay? Maybe, I don't know, five or six, seven customers, all right, all in U. S. Big customers, all right? Is there anything else?

Speaker 7

Yes, maybe just clarify based I'm sorry if I missed this, but like embedded within the guidance for March, where do you see a CATTV versus data center sales? Data center should be up, I'm assuming, and maybe some moderation in cat TV? Thank you.

Speaker 5

That's it.

Speaker 3

Yes. I mean, again, we don't really break it out by product line like that. But I think we've said pretty consistently that we're going to reach a kind of plateau in CATV revenue. I mean, I've been pretty consistent in past calls talking about how at some level, our CATV revenue is limited by the rate at which our customers can deploy the product, right? This is not like data center where a technician can just go into the data center and replace a bunch of product all at once.

Speaker 3

Each one of these amplifiers needs to have a crew at the bucket, trucks and a lot of infrastructure is required to do that. So there's just a natural limit to how much of that can be installed in any given quarter. So we expect to see kind of a plateauing in the CATV business. And as Thompson mentioned, the cable I mean, excuse me, the data center business is where we expect to see most of the growth going forward.

Speaker 2

And by the way, the Q1 guidance is not limited by demand. It's because of Chinese New Year, as you know. So there's two, three weeks or even one month, including the manpower issues. So otherwise, I think the revenue will be much, much higher. So in Q1, the revenue is limited by our capacity, especially in manpower, okay, not the demand.

Speaker 2

So that's why we are working very hard to catch up the demand for the customer, especially in data center. So 100 gs, 400 gs, then 800 gs, as in possible, we should start getting to body manufacture in Q2, first of Q3. Great. Thanks.

Speaker 6

Okay.

Operator

The next question comes from Dave Kang with B. Riley Securities. Please go ahead.

Speaker 6

Thank you. Good afternoon. First question is on the cable TV. You got that 52% customer. Is that a disti or can you talk more about that customer because it's not ATX, right?

Speaker 3

No, it's the same big customer we've had for the last few quarters in cable and it is a stocking distributor for cable TV products in The U. S.

Speaker 6

So how is that, can you talk about the difference between demand difference between your product versus say like DAA from Harmonic and Wissinga where they're talking about slowing down where you guys seem to be kind of immune from that?

Speaker 3

Yes. I mean, I think we've mentioned this on the last few calls, but I'll kind of reiterate that. So the DAA the element that is principally causing the DAA deployments to slow down is a remote PHY module. It goes out in the node and it translates the digital input and output signals into analog signals that can be carried over the rest of the coax portion of the HFC network, okay? That particular device has had some challenges, okay?

Speaker 3

And so our products are downstream of that device. Right now, what we're selling are the amplifier products that go downstream of the node, okay? So those the upgrade of those amplifiers is independent of the DAA aspect of the network, okay. And carriers can get benefits from deploying the amplifiers independent of whether or not the node has been upgraded. And so that's what they're doing.

Speaker 3

As they work their way through whatever the issues remote PHY deployments, they're going full speed ahead on their amplifier upgrades. So that when the remote PHY devices and the nodes are ready, then they'll be able to immediately or more quickly turn on DOCSIS four point zero services.

Speaker 6

Got it. And then regarding your top customer, that Disney customer or cable TV customer, I mean, who are their major customers? I mean, do they sell to major MSOs like Charter and Comcast or any more color on their customer base?

Speaker 3

I mean, yes, they do sell to large MSOs, including the ones that you mentioned and a variety of others.

Speaker 6

Got it. And as you said,

Speaker 3

these units the units that we have been selling are principally destined for large North American MSOs who are doing upgrade projects.

Speaker 6

Got it. And then I'm assuming when you talk about second half regarding 800 gig ramping in second half, I'm assuming third quarter, What's your lead or expected lead times for 800 gig? Is that like maybe ten weeks or eight weeks?

Speaker 3

Something like that.

Speaker 2

I mean, that's been

Speaker 3

I mean, typically our lead time in the data center business has been somewhere around eight to ten weeks. I guess that would be what we would expect for the 800 gig as well. There's no principal reason why 800 gig would differ from that.

Speaker 6

Got it. Okay. Sounds good. Thank you.

Speaker 2

Yes.

Operator

The next question is a follow-up from Tim Savageaux with Northland Capital Markets. Please go ahead.

Speaker 4

Thanks. And this kind of follows on to Thompson's comments about mid year capacity. And so it sounds like a lot of this is going to need to happen pretty quickly. I guess talking about the potential for a strategic investment, it seems like if that's going to happen, that would need to happen pretty soon to be part of the financing of the capacity. I just want to get any color on that, on any expectations you might have.

Speaker 6

Well,

Speaker 3

look, I mean, we've been adding I mean, as you can see, our CapEx numbers are have ramped fairly dramatically over the last couple of quarters already. So we're not holding back on investments that we need to make until we get a strategic investment. What I was trying to say in our prepared remarks was simply that those discussions are ongoing and that that could be a part of our financing plan.

Speaker 4

Okay. Thanks very much.

Speaker 2

And let me ask something too. For the 400G multimode, the main reservoir actually is not the shortage, it's ALC, but the same capacity can be used for 800G ALC too. So if it comes to then the capacity is 240,000 per month offshore reach or 120,000 per month ALC by June or July and for both 180 and that's based on the demand from the customer. The other is most of this new production line will be almost fully automatic, not like 100 gs manufacturing line. It's total different.

Speaker 2

So we can set minimum 80% to 90% main power. And that's why we are very confident we can manufacture in Q3. All right. Thank you.

Operator

And the next question comes from Michael Genovese from Rosenblatt Securities as a follow-up. Please go ahead. Hello, Michael, you're on the podium again.

Speaker 5

Sorry, I was on mute there. Thanks again. Just last follow-up question for me. I just want to ask directly, have you guys qualified an 800 gs product with any customer yet and have you shipped any 800 gs revenue in the fourth quarter?

Speaker 2

We are almost there. We ship out a lot of the 800 gs, but it's very few hundred or few thousand that's called the final qualification beside the lab is more likely that's in the qualification, something like that.

Speaker 3

Okay. Nextiva customer.

Speaker 5

To more than one customer, you said?

Speaker 2

Three or four, three or four, I guess.

Operator

At this time, we have no further questions, and I will turn the call back over to Doctor. Thompson Lin for closing remarks.

Speaker 2

Okay. 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. We look forward to see many of you at ROC.

Speaker 2

Thank you.

Operator

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

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