Great content, building on the framework Insane Analyst just put out nicely. Love when multiple of my favorite sources align. Citrini gave an indirect but fairly implied rec in his last piece as well. Looks like the derivative Twitter universe has caught on now as well which will kill our low beta but should push this towards ATH's soon I think. Either way, core position. I appreciate the modeling - it's always directional in nature but takes balls to take a stance.
CPO market is 1. very large and 2. very far out. It won't start cannibalizing transceiver share until 2029 ish, and around that time optical I/O might get adopted which puts OEs on every single XPU surging SiPho content. It could go either way we just don't know what's gonna happen.
That is the exact same logic as CRDO and why it won’t work. In CRDO’s case, you can argue copper and optical co-exist for a long time while near term earning explodes. However, the reality is people will put on significant discount to your terminal value. Seems like similar set up here …? it feels the CPO content value has to be the most critical thesis for rerating
CRDO is fundamentally a copper company. Nobody has an optical bull case for them. For TSEM there are people arguing for why its a CPO play. You can't compare the two. All I am saying is their share in CPO is constrained and it is not a pure CPO play like LITE or SOI. In an upside case the open CPO ecosystem could be large enough that they capture 50% of it.
That’s fair. It is a better setup. I guess I’m still struggling with how it can rerate if CPO participation is relatively low. Since everyone knows they gonna 5x capacity and it is trading at current level for a reason.
Great content, building on the framework Insane Analyst just put out nicely. Love when multiple of my favorite sources align. Citrini gave an indirect but fairly implied rec in his last piece as well. Looks like the derivative Twitter universe has caught on now as well which will kill our low beta but should push this towards ATH's soon I think. Either way, core position. I appreciate the modeling - it's always directional in nature but takes balls to take a stance.
Indeed. We live in a Twitter driven PA world
if tower has
Very high content share in pluggables
Modestly low content share in CPO
How is CPO not a headwind ?
CPO market is 1. very large and 2. very far out. It won't start cannibalizing transceiver share until 2029 ish, and around that time optical I/O might get adopted which puts OEs on every single XPU surging SiPho content. It could go either way we just don't know what's gonna happen.
That is the exact same logic as CRDO and why it won’t work. In CRDO’s case, you can argue copper and optical co-exist for a long time while near term earning explodes. However, the reality is people will put on significant discount to your terminal value. Seems like similar set up here …? it feels the CPO content value has to be the most critical thesis for rerating
CRDO is fundamentally a copper company. Nobody has an optical bull case for them. For TSEM there are people arguing for why its a CPO play. You can't compare the two. All I am saying is their share in CPO is constrained and it is not a pure CPO play like LITE or SOI. In an upside case the open CPO ecosystem could be large enough that they capture 50% of it.
That’s fair. It is a better setup. I guess I’m still struggling with how it can rerate if CPO participation is relatively low. Since everyone knows they gonna 5x capacity and it is trading at current level for a reason.