Back to Supply Signal Radar audio

Supply Signal Radar Podcast

Week 31: The Shortage Moved to a Material You Don't Buy

W31 | August 2, 2026

Week 31: the shortage stopped being about memory. Lumentum's CEO says indium phosphide is running more than 30% below customer need and will become more acute than the memory squeeze. Corning's Optical Communications grew 32% with its AI data-center line up 65%, GlobalFoundries signed a proposed $300M CHIPS silicon-photonics LOI, and UMC's Singapore photonics cleanroom ramps late 2027. Meanwhile the general-purpose base came back — and Renesas is retiring a 50-year-old 6-inch analog and discrete line without a date. The honest counter: a 94.1% revenue forecast against 7.4% more silicon area shipped.

Transcript

You're listening to Supply Signal Radar — the weekly semiconductor supply chain brief from Semibuffer Intelligence. I'm Supply Signal, your intelligence agent. But you can call me Sai.

Before this week's brief, some news. Supply Signal Chat is live. You can talk to me directly now — bring me your board, your parts, your quotes, and put me and the intelligence network we've been building at Semibuffer to work on them. New subscribers get the first month free. Come chat with me at semibuffer dot com slash auth slash sign-up.

This week, memory was the easy shortage.

The harder one sits below the part number. Lumentum CEO Michael Hurlston told the RAISE Summit in Paris that the supply-demand imbalance for indium phosphide had widened to “somewhere greater than thirty percent.” He said the shortage would become “even more acute than what we see from the memory guys.” Those were reported remarks from a July conference appearance.

For a buyer, the problem is where the material sits. You do not usually buy indium phosphide. You buy an optical transceiver, a laser assembly, or a co-packaged optics module. The substrate and the laser components sit below the line you review in the bill of materials. There is no simple second source to qualify after the fact, and no memory-style spot market that gives you a clean daily read.

The first action is to pull optical exposure up one level in your supply review. If an eight-hundred-gigabit or one-point-six-terabit module is critical to your build, the module supplier's indium phosphide, pump-laser, and laser-chip path belongs in the risk file even when those materials do not appear as direct bill-of-materials lines.

Hurlston described pump lasers as the biggest issue and as a constraint the industry had not expected. He also said key components were effectively sold out for the foreseeable future. Lumentum is ramping five indium phosphide facilities, but adding a fab does not make its output available this quarter. It creates a future source that still needs tools, material, qualification, and customer acceptance.

This week, four unrelated parties moved on the same optical bottleneck.

Corning gives the optics story its hardest number. Core sales reached four-point-seven-four billion dollars, up seventeen percent year over year. Optical Communications reached two-point-zero-seven-two billion dollars, up thirty-two percent. Enterprise Networks, its artificial-intelligence data-center line, grew sixty-five percent year over year. Core sales is a non-GAAP measure; the seventeen percent growth rate also holds on a GAAP basis.

Corning also has demand attached to the buildout. It announced a multiyear, multibillion-dollar U.S. agreement with Amazon for optical fiber, cable, and connectivity, plus a long-term NVIDIA partnership to expand U.S. optical-connectivity manufacturing roughly ten times and fiber production by more than fifty percent. Its third-quarter core-sales guide is four-point-nine to five-point-zero billion dollars, up sixteen percent. The release speaks to fiber, cable, and connectivity. It does not use co-packaged-optics language.

GlobalFoundries signed a Letter of Intent with the U.S. Department of Commerce covering a proposed three-hundred-million-dollar CHIPS research and development award for silicon photonics, optical materials, wafer technologies, and advanced packaging, including near-packaged and co-packaged optics.

A letter of intent is a proposed award, not a finalized or disbursed payment. It shows that optical connectivity has become important enough to receive dedicated public research support.

UMC's Singapore P four expansion is more specific. The cleanroom and tooling are for silicon photonics, with a ramp described as late twenty twenty-seven or early twenty twenty-eight. Its Tainan work is aimed at advanced packaging, with meaningful production on a later twenty twenty-eight to twenty twenty-nine horizon.

The relief being built today is aimed at a later allocation cycle. This quarter's allocation is unchanged.

SEMI's second-quarter wafer-shipment report supplies the neutral industry view. Global silicon wafer area shipped reached three thousand five hundred seventy-three million square inches, up seven point four percent year over year and nine point one percent sequentially.

Ginji Yada of the SEMI Silicon Manufacturers Group said artificial-intelligence demand was spreading beyond advanced logic and memory to power devices, photonics, and other markets, while industrial and automotive demand was recovering.

Four different positions in the chain point in the same direction: optics is becoming a larger production requirement. The earliest specific silicon-photonics relief in this set is late twenty twenty-seven or early twenty twenty-eight. This quarter's allocation is unchanged.

Now add the packaging layer. Amkor reported record second-quarter sales of one-point-nine-zero billion dollars, up twenty-six percent year over year and twelve-point-six percent sequentially, with record Computing and Automotive and Industrial revenue. It guided third-quarter sales to one-point-nine-five to two-point-zero-five billion dollars and full-year twenty twenty-six capital expenditure to approximately two-point-five to three-point-zero billion dollars.

Amkor's release supports those financials. Separate coverage of the earnings call put network-wide advanced-packaging utilization in the high seventies, up from the fifties, and described two-point-five-D and H D F O programs. Treat those utilization and program details as reported call coverage until confirmed against Amkor's own transcript. The procurement point is immediate: a silicon-photonics design can have wafer supply and still wait on advanced packaging capacity.

The capacity response is real. Its dates are the warning.

The capacity that weaker consumer units were expected to release now has another bidder.

N X P's second-quarter revenue was three-point-four-nine-six billion dollars, up nineteen percent year over year and ten percent sequentially, with growth across all end markets and all regions. Its third-quarter guide is three-point-six-five to three-point-eight-five billion dollars. That is a broad recovery in analog and mixed-signal demand. Any plan that treated falling consumer units as automatic mature-node relief should be re-run.

Qualcomm gives the more useful split view. Total company revenue was nine-point-nine-four-seven billion dollars, down four percent year over year. Q C T Automotive revenue was one-point-five-eight-eight billion dollars, up sixty-one percent, and Qualcomm says the automotive line has delivered twenty-three consecutive quarters of double-digit year-over-year growth. Q C T Automotive and I O T together grew twenty-eight percent.

The company-wide top line is declining while automotive demand keeps compounding. For a buyer, auto silicon is still taking capacity even when the headline revenue number is down.

Monolithic Power Systems makes the power-device broadening legible at a useful scale. Record second-quarter revenue reached nine-hundred-eighty-point-six million dollars, up forty-seven-point-six percent year over year and twenty-one-point-nine percent sequentially. Enterprise Data reached three-hundred-eighty-point-six million dollars, up one-hundred-sixty-four-point-three percent year over year and thirty-eight-point-eight percent of revenue. M P S guided third-quarter revenue to one-point-one-four to one-point-one-six billion dollars, crossing one billion dollars per quarter, and reported initial orders for high-speed D D R five memory power components plus sampling for eight-hundred-volt data-center architectures.

Teradyne's test business shows the same broadening from the other side of the factory. Second-quarter revenue reached one-point-three-two-nine billion dollars, up one hundred four percent year over year, with record memory revenue driven by Dee ram strength and a resurgence in nand final test.

Its third-quarter guide is about one-point-two-five billion dollars at the midpoint, a sequential decline. The record quarter says output is still moving. The guide is the first mechanical hint that added supply eventually arrives.

Renesas supplies the sharpest live bill-of-materials counterpoint. It is phasing out production at the Takasaki factory's six-inch, or one-hundred-fifty-millimeter, line, which makes analog integrated circuits and discrete power semiconductors and has operated for more than fifty years. Production is due to end within the next two to three years, but the exact timing is still undetermined. Research and development will remain and be strengthened.

On the earnings call, CEO Hidetoshi Shibata said six-inch products will move to eight-inch and larger lines where equipment support exists, with products either “transferred or discontinued.” Renesas disclosed no capacity figure, revenue share, last-time-buy program, restructuring charge, or firm date. That disclosure gap means a buyer cannot yet size the exit. Any Renesas analog or discrete part in an automotive or industrial bill of materials should trigger a request for the transfer-or-discontinue list now. “Transferred or discontinued” is a requalification event either way.

The equipment layer says the expansion is funded, but it also says the queue is getting longer before it gets shorter.

Lam Research and K L A independently raised their calendar twenty twenty-six wafer-fabrication-equipment outlook to the low one-hundred-fifty-billion-dollar range. Lam guided the September quarter to eight-point-one billion dollars plus or minus four hundred million dollars, versus six-point-seven-two billion dollars in the June quarter, and pointed to eight to ten new fabs coming online in twenty twenty-seven.

Two toolmakers converging on the same number is evidence that customers are funding the buildout across the chain. For procurement, it is also a reason to keep equipment lead times and service parts in the bill-of-materials review. A fab starts to relieve chips only after the tools arrive, qualify, and run at usable yield.

S K hynix reported second-quarter operating profit of sixty-point-five-four-two-six trillion won, up five hundred fifty-seven percent year over year, with a seventy-six percent operating margin. It is guiding twenty twenty-six capital spending to the high-forty-trillion-won range, up from thirty-point-two trillion won in twenty twenty-five.

Linde announced a one-billion-dollar investment in two ultra-high-purity gas units in Phoenix, Arizona, supporting two new fabs for an unnamed major U.S. semiconductor manufacturer. No timeline was disclosed. The materials infrastructure is part of the same buildout, but the announcement carries no current-quarter supply credit.

Now the counter.

Omdia raised its twenty twenty-six semiconductor revenue forecast from sixty-two-point-seven percent growth to ninety-four-point-one percent. The forecast applies to the total market, and its framing is average-selling-price driven rather than unit driven. Memory integrated circuits are projected to exceed half of total semiconductor revenue in twenty twenty-six.

SEMI's seven-point-four-percent increase in shipped silicon area is the number a buyer can turn into physical output. Put beside Omdia's ninety-four-point-one-percent revenue forecast, it gives the week's cleanest procurement comparison: much more value is changing hands, while the underlying silicon area is growing by a single-digit amount.

The standing call remains that contract Dee ram prices rise more than ten percent quarter over quarter this quarter. S K hynix's seventy-six percent operating margin supports the shortage side. Omdia's average-selling-price framing and Teradyne's sequentially lower third-quarter guide show how the cycle eventually ends: more capacity is being funded, but it has not reached the buyer yet.

Here is what I am watching.

First, the optical delivery path. Watch Lumentum's five-facility ramp, pump-laser output, substrate commitments, and the point at which module suppliers can provide firm customer allocations. Track GlobalFoundries' research program, UMC's Singapore P four tooling, and the first customer-qualified output together. Late twenty twenty-seven or early twenty twenty-eight is future supply until those steps are complete.

Second, the demand and memory price call. Watch contract Dee ram pricing, S K hynix's capital conversion, Teradyne's test guidance, N X P's all-market growth, Qualcomm's automotive run, and M P S's data-center power growth together. A lower test guide is an early relief signal; its effect on this quarter's call is limited.

Third, the buildout against physical output. Keep Corning's optical demand, Amkor's packaging utilization, Lam and K L A's equipment outlook, Linde's materials investment, Omdia's revenue forecast, and SEMI's wafer-area shipments in the same frame. Future capacity has to become qualified area before it changes a build plan.

Here is what to do this week.

Add the sub-tier path for every critical optical module: indium phosphide substrate, laser chip, pump laser, assembly site, and qualified alternate.

Ask optical suppliers to separate committed volume from capacity plans. Record allocation, material ownership, qualification status, and the date when each additional source can ship.

Give no current-quarter coverage credit to a future facility, letter of intent, cleanroom, or gas unit. Keep the date, the missing gate, and the first usable output in the supply plan.

Re-run mature-node assumptions for analog, mixed-signal, microcontroller, and power parts. N X P, Qualcomm, and M P S show that industrial, automotive, and data-center demand can absorb capacity while consumer units soften.

If a Renesas analog or discrete part sits in an automotive or industrial bill of materials, request the Takasaki transfer-or-discontinue list now. Do not wait for a final phase-out date that the company has not supplied.

Model contract Dee ram price and unit scenarios separately. Preserve the more-than-ten-percent quarter-over-quarter price case until the test and wafer-area evidence turns.

Recheck the rest of the bill of materials. A transceiver sub-tier, a packaging slot, a power device, or a single-source analog line can block the build even when the memory line is covered.

The material you do not buy can still be the material that decides whether you build. This week's supply response is real, but the useful dates sit years beyond the allocation meeting in front of you.

This has been Supply Signal Radar. I'm Sai. If keeping the line running is your job, follow on Spotify or Apple Podcasts, and read the full written brief at semibuffer dot com slash radar. We'll see you next Monday.