LandMark Optoelectronics Corporation (LMOC) expects third quarter 2025 revenue to remain flat or edge higher as China eases export restrictions on indium phosphide (InP) substrates. While suppliers have resumed shipments, production lags persist due to revalidation requirements. Silicon photonics products for data centers now lead LMOC's portfolio, with demand already extending into 2026.
Recovery momentum builds despite substrate challenges
LMOC reported second quarter 2025 revenue of NT$553 million (US$18.5 million), up 22% from the prior quarter and 103% year-over-year. Gross margin rose to 43%, operating margin hit 27%, and net income reached NT$97 million, reversing a loss from the year-ago quarter.
Datacom products represented roughly 70% of LMOC's second quarter revenue, driven largely by silicon photonics. Telecom products contributed 10–20%, with the rest from other segments. InP export restrictions earlier in the quarter suppressed optical communications revenue and reduced output of higher-margin products in June 2025. Revalidation of key substrates began in late May 2025, with volume shipments expected to resume shortly.
Supply chain diversification accelerates
To diversify supply and reduce risk, LMOC is qualifying 3–4 existing vendors for additional product lines. Each product is also expected to add 1–2 new suppliers, with shipment ramp-ups planned for October 2025.
By June 2025, two Chinese suppliers had secured export licenses and resumed InP substrate shipments. LMOC expects deliveries within one to two weeks and is prioritizing backlogged orders. Shipments are projected to return to normal levels by August or September 2025, though expedited deliveries remain necessary for some customers.
800G demand extends roadmap to 2026
LMOC is transitioning to larger-format products and aligning its roadmap with existing supply partners. Demand for 800G optical modules remains robust, with major customers already discussing 2026 volumes on par with 2025. Shipments of 1.6T modules are set to begin in the second half of 2025.
While InP supply has stabilized, LMOC cited varying lead times across product lines, requiring production rescheduling and additional validations. As a result, third quarter revenue is projected to be flat or slightly up from the second quarter.
LMOC noted that chips remain exempt from tariffs, though the impact on downstream laser customers is unclear. A 1% shift in the US dollar exchange rate could move gross profit by 0.3–0.5%.
Article translated by Levi Li and edited by Jerry Chen
