Jason

$ARM expects $15B in annual revenue from the the AGI CPU: "The company projects that the new chip business will generate over $15 billion in annual revenue" within the next 5 years. 5 times current revenues (~$25B revenue)... Arm probably deserves to be up more than 5% on this news if they're multiplying their revenue with a new product overnight?

Education Saturday! 📓 For all my Photonics followers, you'll want to learn this $AXTI $LITE $COHR $GLW $POET etc. The Photonics Supply Chain: Start to Finish. Step 0: Mining and Refining It starts with a metal called indium. Indium is what makes high-performance data center lasers possible today. Without it, you can't build the components that move data at the speeds AI demands. Indium has no dedicated mines. It doesn't get extracted on its own. It's a byproduct of zinc refining, meaning it only gets recovered when zinc smelters have the equipment and economic incentive to capture it from their waste. Step 1: The Substrate Refined indium gets combined with phosphorus to create a material called Indium Phosphide, or InP. InP has a unique property in that it can generate light directly from electricity. Silicon, the material that runs everything else in computing, cannot do this. That's why InP is the go to for the lasers inside data center optical components. The first thing you make with InP is a wafer which is a thin, flat disc that serves as the foundation for everything built on top of it. InP wafers are expensive, brittle, and difficult to produce at large sizes. The industry is only now moving to 6-inch wafers. For context, standard silicon chip fabs run on 12-inch wafers. That size gap is a big part of why photonics capacity is so hard to scale quickly. Step 2: Epitaxial Growth A bare InP wafer still can't do anything useful. To create a laser, you have to grow extremely thin additional layers on top of it, each just a few nanometers thick (a human hair is roughly 80,000 nanometers wide). This process is called epitaxy. The exact chemical composition of each layer determines the laser's wavelength, power, and efficiency. Get it slightly wrong and the entire wafer is scrapped. This step requires specialized equipment found in very few places in the world. It's rarely talked about, but it's one of the most critical bottlenecks in the entire supply chain. Step 3: Wafer Fabrication Now the actual circuit gets built. Using techniques similar to semiconductor chip manufacturing (patterning, etching, depositing materials etc.) engineers carve microscopic structures into the wafer: the channels that guide light (called waveguides), the cavities where light gets amplified, and the components that switch it on and off. Unlike standard chip manufacturing, at this time this cannot be done in a regular semiconductor fab. It requires a dedicated photonics facility. These take years to build, qualify, and ramp. There are very few of them in the world. Step 4: Dicing and Yield The finished wafer gets cut into individual chips. Each chip is then tested to see if it actually works to spec. The percentage that pass is called yield and it's one of the most important numbers in this business. Low yield means high cost per working chip. Improving yield is one of the biggest levers on profitability, and it's hard-won through years of process refinement. You probably won't see it reported directly, but it's hiding inside gross margins. Step 5: Component Assembly A working laser chip still can't be used on its own. It has to be physically aligned to an optical fiber with tolerances finer than a fraction of a micron and combined with other components like light detectors and signal modulators to create a functional optical sub-assembly. Automating it reliably at high volume remains one of the hardest manufacturing problems in the industry. The assembled component also has to be hermetically sealed inside a protective ceramic and metal enclosure. Data centers run hot, and moisture or dust will degrade a laser chip quickly. These hermetic packages are specialty components with few suppliers and long lead times and they have shown up as a bottleneck alongside InP when demand spikes. Step 6: The Transceiver Module The optical sub-assembly goes into a housing along with a DSP chip (a processor that cleans up and interprets the light-based signals) plus a circuit board and casing. The result is a pluggable transceiver: the finished module that slots into a switch or server in a data center. These individually get tested before it ships. That testing process is slow and expensive, and it's a hidden constraint on how fast output can actually scale. Note, in the world of CPO this will change. Step 7: Into the Data Center It plugs into a port on a network switch inside the data center, the hardware that routes data between thousands of servers. And none of it moves an inch without the fiber it runs through. Ultra-pure glass strands, thinner than a human hair, carrying light signals between every switch, server, and building. Follow stocks in this space? Drop a ticker below and I'll tell you exactly where they sit in the stack 👇

BREAKING: Netherlands’ House of Representatives has approved a 36% tax on unrealized capital gains.