Finn Stockinger

💎 G&H $GHH: The Silicon Alchemist Holding the Keys to 2nm and the Pentagon Since you enjoyed my deep dive into Sivers Semiconductors (SIVE) so much, it’s time to introduce you to the next heavy hitter in the space. Meet Gooch & Housego (LSE: $GHH) - a British specialist that for decades was seen as a quiet lens maker, but in 2026 has emerged as the physical bedrock for AI, 2nm lithography, and U.S. national defense. 1⃣ TFLN: The "Holy Grail" and the Raytheon Contract (Feb 2026) Let’s start with the most explosive fact. On February 17, 2026, U.S. defense giant Raytheon $RTX, backed by the Air Force Research Laboratory (AFRL), selected G&H as the critical partner to build an independent, domestic U.S. supply chain for Thin-Film Lithium Niobate (TFLN) wafers. Why is this electrifying the industry? TFLN is the material that enables data transmission at 1.6T and 3.2T speeds with near-zero energy loss. Until now, this market was dominated by Asian suppliers. By leveraging Raytheon’s "ion slicing" technology, G&H is initiating production (LRIP) in the U.S. This isn't just an order; it’s a strategic hand-off of the material required for the next generation of 6G connectivity and hypersonic missile guidance. 2⃣The Shadow of a Giant: ASML and High-NA EUV G&H doesn't need to shout about its success because the machines in TSMC and Intel fabs do it for them. As of March 2026, the market has entered the mass implementation phase of High-NA EUV systems (Twinscan EXE:5200). These $350M machines require Acousto-Optic Modulators (AOM) with atomic precision to "slice" laser beams at megahertz frequencies. G&H is the qualitative monopolist here. Through the acquisitions of Global Photonics (May 2025) and Phoenix Optical (2024), the company has closed the production loop. They grow the crystals, polish them, and apply the EUV-resistant coatings themselves. G&H is the "optical heart" of sub-2nm lithography. 3⃣AI Data Centers and CPO (Co-Packaged Optics) In AI data centers, copper cabling is a legacy bottleneck, it generates too much heat. The future is CPO, where optics move directly onto the processor package. However, photonic chips have a flaw: internal lasers overheat. The solution is ELS (External Laser Sources) - external "light power plants." At the OFC 2026 conference (March 2026), it was demonstrated that G&H provides laser modules with such high stability that they are becoming the industry standard for CPO systems. G&H doesn't build the AI; they provide its "oxygen." 4⃣The Hidden Ace: Quantum Computing If AI is the brain, Quantum Computing will be its turbocharger. G&H provides the Ion Traps - the fundamental hardware for quantum computers built by industry leaders like Quantinuum. Their components manipulate individual atoms using lasers. This is "impossible-tier" technology where G&H holds a unique competitive edge in the Western hemisphere. 5⃣The Investment Thesis: G&H is a classic "Picks and Shovels" play. While others fight over whose LLM is smarter, G&H owns the physical IP: ➡️Order Book: A record £168.3M (as of Feb 2026), exceeding total 2024 annual revenues. ➡️Financials: Debt has dropped to £28M, while operating margins are trending toward 15% as they shift from "components" to high-value "systems." ➡️Valuation: With a market cap around £230M and a share price near 820p, the retail market still views G&H as a local Somerset firm, while the Pentagon treats them as a Tier-1 strategic technology partner. 👇Bottom Line: G&H doesn’t ask for attention - it simply controls the flow of light in a world that ceases to function without it. What do you think - is G&H the missing link in your semiconductor portfolio? Follow for the next deep dive into the hardware of the AI revolution.

Photonics is the New "AI Fabric": Why Coherent $COHR is the Key to Scaling Supercomputers Yesterday’s Technology Innovation Briefing in Los Angeles made one thing clear: in the AI arms race, we have reached a point where networking hardware is becoming as critical and as scarce as the GPUs themselves. Coherent is no longer just a component supplier; they are becoming the architects of the physical layer of neural networks. Here is a deep dive into the four pillars of their dominance: 1⃣1.6T Architecture and the XPO Standard: The End of the Copper Era While the market is still digesting the move to 800G, Coherent showed they are already two steps ahead. The centerpiece was the new XPO (eXpandable Pluggable Optics) platform. ➡️The Problem: Traditional pluggable modules at 1.6T and 3.2T speeds generate so much heat that classic air cooling in data center racks is failing. ➡️The Solution: XPO is a breakthrough form factor that integrates liquid cooling directly with the optics, allowing for throughput of 12.8 Tb/s per line card. This drastically increases power density while reducing TCO (Total Cost of Ownership) by 20-30%. Coherent isn't just providing the "pipe" for data; they are solving AI’s biggest physics problem: heat. 2⃣The InP Monopoly: Vertical Integration as a Moat In an era of supply chain fragility, Coherent holds a unique high-ground: in-house 6-inch InP (Indium Phosphide) wafer fabrication. They are the only player in the industry to successfully transition from 3/4-inch to 6-inch wafers, providing a massive cost and performance advantage. ➡️The Ramp-up: Management announced aggressive scaling - capacity for EML lasers and detectors is set to double in 2026 and double again in 2027. ➡️Why it matters: Most competitors must source laser chips from third parties. By controlling the process from raw material to finished transceiver, Coherent commands a "dictatorial" position in setting margins during this AI demand surge. 3⃣Multi-rail & Scale-Across: The New Geography of Data Centers AI clusters are becoming so massive they no longer fit in a single building. This is where Multi-rail technology comes in a segment Coherent identifies as its next billion-dollar market ($2B+ SAM by 2030). These systems allow for the connection of thousands of GPUs in a "sub-linear" fashion meaning you increase computing power without a proportional increase in power consumption or cabling complexity. Utilizing unique amplifiers and switching matrices (DGE/OCM), Coherent enables "Campus-wide Fabrics." This technology allows thousands of servers across multiple halls to act as one singular, giant supercomputer. 4⃣Thermal Management: Is Diamond an Investor's Best Friend? Perhaps the most underrated, yet potentially most lucrative point: Thermadite™, their diamond-based thermal materials. The thermal conductivity of these components is 2 to 5 times higher than copper. As Blackwell-class processors and their successors push the thermal limits of silicon, Coherent’s solutions become mandatory. They are positioning themselves as the leader in passive cooling for the most stressed network and compute elements. This is the "smart money" play - selling the solution to the problem every hyperscaler is about to hit. 5⃣Vertical Integration & The $70B Roadmap: The Gatekeeper of AI Supply While competitors focus on design, Coherent focuses on ownership. Their secret weapon is a fully integrated, "sand-to-system" manufacturing model that creates a massive barrier to entry. ➡️ The 6-inch InP Advantage: Coherent is the only player in the industry to successfully transition to 6-inch Indium Phosphide (InP) wafer fabrication. Why it matters: This isn’t just a technical flex - it’s a massive margin play. 6-inch wafers provide more than double the chips per wafer compared to the old 3/4-inch standard, giving Coherent a cost structure that is untouchable for those who source chips from third parties. ➡️ Hyper-Scaling Production: Management isn't just expecting demand; they are preparing to monopolize it. The Ramp-up: Capacity for EML and CW lasers is set to double in 2026 and double again in 2027. In a world where AI infrastructure is supply-constrained, Coherent is positioning itself as the only provider capable of supporting the massive 1.6T and 3.2T build-outs. ➡️ Massive Market Expansion (SAM): The briefing redefined Coherent’s Serviceable Addressable Market (SAM) to a staggering $70B+ by 2030. Existing Engines ($50B+): Dominance in 800G/1.6T transceivers and DCI. New Growth Engines ($20B+): This represents a whole new frontier in high-margin revenue: ✅Optical Circuit Switches (OCS): $4B SAM ✅Thermal Solutions (Diamond): $2B SAM ✅Multi-rail Systems: $2B+ SAM ✅CPO/NPO Technologies: $15B+ SAM ⬇️The Verdict: Coherent is no longer just a "tech play" - it is a volume and margin monster. By controlling the raw materials (InP, Diamond) and doubling down on production, they have secured their spot as the "Gatekeeper of Photonics." They aren't just riding the AI wave; they are building the dam that controls it. 👇 Coherent is clearly building the 'nervous system' of AI, and I’m putting my money where my mouth is - I officially added to my $COHR position at today's open. But I want to hear from you: Is vertical integration the ultimate moat in this semi-cycle, or is the market underestimating the thermal challenge? Drop your thoughts below!👇

$SIVE Many of you might be wondering... What is a CW laser? Why should you care about it? This post was good timing because I'm actually in the process of writing up a post on CW lasers vs EML lasers What the difference is What they are used for How SiPh & CPO impact the need for them What companies make them What (if any) moat there is etc. Will share as soon as it's fully written out