Photronics' US Expansion and Advanced Capabilities Investment Strategy
Photronics is expanding its cleaning facility in Texas to support increased demand for U.S. midrange nodes, reflecting a strategic shift towards geographic diversification.
The company is elevating its leading-edge production capabilities in Idaho with a new multi-beam mask writer to serve high-end semiconductor markets.
These US projects align with broader industry trends of reshoring semiconductor manufacturing to the United States, positioning Photronics to benefit from this reshoring movement.
Management emphasized leveraging a strong balance sheet to reinvest in capacity and technology, aiming to drive future revenue and earnings growth.
The US expansion and advanced capability investments are part of a multi-year strategic plan, with CapEx expected to remain elevated for about three years due to end-of-life tool replacements and new technology rollouts.
Strategic Restructuring and Cost Optimization Initiatives
3D Systems is executing a comprehensive restructuring plan aiming to deliver over $85 million in annualized savings by mid-2026.
The company has in-sourced manufacturing operations over the past two years to improve quality control and reduce costs.
Restructuring efforts include facility closures, business and legal entity rationalization, and automation of back-office processes.
The company is targeting to reduce operating expenses to the low $40 million range by the end of 2025, supporting a move to positive cash flow.
Management highlighted that the scale and balance sheet flexibility have enabled them to navigate the restructuring while maintaining core R&D investments.
The timing of facility subleases remains a challenge, impacting the full realization of cost savings.
Accelerated Optical Circuit Switch (OCS) Revenue Recognition and Capacity Expansion
Lumentum received its first revenue from optical circuit switches (OCS) in the quarter, with shipments to two hyperscale customers, and a third customer committed for 2026.
The company expects significant revenue contributions from OCS in the first half of 2026, with a more meaningful inflection point in the second half.
In-house OCS manufacturing capacity is being expanded rapidly to meet high demand, with a focus on 300x300 form factors that offer volume advantages.
The largest single purchase commitment in company history was received for ultra-high-power lasers supporting CPO, indicating strong strategic emphasis on this emerging technology.
Investments are underway in U.S.-based wafer fab to support CPO, positioning the company for a revenue ramp in the second half of 2026.
Management highlighted that OCS is expected to be significantly above company average margins and highly accretive as volume scales up.
Dafinchi