Arista Networks faces supply crunch despite record AI demand

Marvell Technology and GlobalFoundries have expanded their multi-year agreement to increase production capacity for silicon germanium, or SiGe, at GlobalFoundries' facility in Burlington, Vermont, sending Marvell shares up more than 4% and GlobalFoundries shares up more than 6% on September 17. SiGe is a semiconductor technology used in high-speed optical connections for data centers, allowing devices to operate at higher speeds while using less energy. Robb Johnson, Vice President of Foundry Technology at Marvell, said the expanded collaboration will help ensure the company has the SiGe technology and manufacturing capacity to support the significant growth it expects ahead, and the added capacity will help Marvell meet growing demand for optical networking products including pluggable optical transceivers, near-packaged optics, and co-packaged optics. GlobalFoundries reported $1.786 billion in revenue for the second quarter of 2026, up 6% year over year, with its communications infrastructure and data center segment accounting for about 16% of total revenue and growing 20% sequentially and 62% year over year, and CEO Tim Breen said demand for SiGe remains strong and the company is oversubscribed throughout 2027. Marvell reported record net revenue of $2.739 billion in the second quarter of fiscal 2027, up 37% year over year, and Chairman and CEO Matt Murphy said AI-related bookings remain exceptionally robust as the company raised its revenue outlook for fiscal 2027 and fiscal 2028.

Keysight Technologies executives said AI data-center buildouts are driving demand that currently exceeds supply, with revenue pushed beyond the company's typical six-month order-to-revenue window approaching $100 million. Speaking at a Truist investor conference, Chief Financial Officer Neil Dougherty said quarterly revenue has climbed from $1.6 billion in the first quarter to guidance of $1.94 billion for the fourth quarter, and that Keysight is adding internal capacity, raising capital expenditures, signing longer-term supplier agreements and qualifying second and third sources to ease constraints. Kailash Narayanan, senior vice president and president of Keysight's Communication Solutions Group, said the biggest contributors to AI-related business are speed transitions and system-level emulation, with traction in 1.6T technology and research already underway on 3.2T, silicon photonics and co-packaged optics. Keysight expects its 6G business to inflect in the first half of 2028, ahead of expected commercialization in late 2029 and 2030, while its U.S. aerospace and defense business has expanded at a strong double-digit rate and Europe is growing faster from a smaller base. Dougherty said the company expects incremental margins at or above its 40% target when growth exceeds 5%, and that three acquisitions completed near the start of the fiscal year are now integrated and expected to provide roughly $50 million in cost synergies next year; Keysight held $2.6 billion in cash at quarter-end and has repurchased more than $500 million of stock year to date.

Coherent Corp. announced on September 17 an upgraded Pluggable Optical Line System that covers the full C-band and fits in a compact QSFP module, the same slot ordinary transceivers use. The system can pack 32 wavelengths onto a single pair of fibers, which Coherent says adds up to as much as 25.6Tbps of traffic on links running 2km to 200km, and it is designed for the latest 800G coherent optics. Coherent says the system is generally available and already shipping in high volume, in 400G and 800G versions that work with existing network setups, according to Madhu Krishnaswamy, who runs the company's telecom transport unit. The launch follows Coherent's fiscal fourth quarter, which ended June 30, when it reported revenue of $2.05 billion, up 34% from a year earlier, and non-GAAP earnings per share of $1.74, up from $1.00. Management guided to revenue of $2.2 billion to $2.4 billion for the first quarter of fiscal 2027, though the announcement puts no sales figure on the new product, so its contribution to a company that booked $2.05 billion in a quarter cannot be sized from what has been published.