Lumentum's Q2 2025: Navigating Contradictions in Chip Supply, Datacom Growth, and Telecom Recovery

These are the key contradictions discussed in Lumentum's latest 2025 Q2 earnings call, specifically including: EML chip supply and capacity expansion plans, status of new Datacom customer ramp-ups, Datacom growth and capacity ramp, and telecom market recovery:



Strong Cloud and Networking Segment Growth:
- Lumentum's Cloud and Networking segment revenue grew 20% sequentially and 18% year-on-year in Q2.
- This growth was driven by robust demand from cloud customers, including hyperscale customers and improving network market conditions.

Supply Chain Constraints:
- The company faced supply chain constraints, particularly in Datacom laser shipments, impacting growth.
- The shortages are due to limited availability of critical components and supplier challenges in meeting demand.

Industrial Tech Segment Challenges:
- Lumentum's Industrial Tech segment revenue increased 15% sequentially but was down 21% year-on-year.
- Weak demand in the industrial end market continues to challenge growth, despite innovations in laser solutions.

Expansion and Future Outlook:
- Lumentum exceeded Q2 guidance with revenue and earnings per share above high-end estimates.
- The company remains confident in achieving $500 million in quarterly revenue by the end of 2025, driven by growth in cloud and AI opportunities.