October 10, 2026 / SemiMedia / — Lumentum Holdings said some of its optical component capacity is effectively sold out through early 2029 as AI data center expansion and rising demand for high-speed optical connectivity continue to outpace supply.

CEO Michael Hurlston said the company is still far behind customer demand despite aggressive capacity expansion. For some products, around 70% of demand could remain unmet next year, while other product lines may still face a roughly 30% shortfall in 2028.

Lumentum supplies indium phosphide and other advanced optical components used in high-speed cloud and data center networks. As GPU clusters become larger, demand for 800G, 1.6T and next-generation optical links is increasing rapidly, making lasers, modulators and related photonic components a critical part of AI infrastructure.

To increase supply, Lumentum has expanded capacity at its core manufacturing site in the Tokyo area by about 12 times over the past two years. The company plans to invest at least $350 million in that site and adjacent facilities while also increasing production at its Caswell operation in the United Kingdom.

New optical manufacturing capacity, however, takes time to build. Hurlston said adding major new production capability can require three to five years, limiting how quickly suppliers can respond to the current increase in AI infrastructure demand.

Hyperscale cloud companies are increasingly helping suppliers manage that risk through long-term commitments and capital support. Lumentum said some customers are willing to share part of the investment burden in order to secure future optical component supply.

The shortage highlights how AI infrastructure constraints are spreading beyond GPUs, HBM and advanced packaging into optical connectivity. Lumentum expects annual sales to more than double this year and is also considering acquisitions to add further capabilities over the next year.