What's the Strategies of LITE
$Lumentum(LITE)$ is caught right in the middle of the new Cold War, and strategic rare earths are the ammo
$Lumentum(LITE)$ CEO Michael Hurlston just said that there's still a 30% gap between EML supply and demand, but China decides whether or not it closes. Despite this shortage,
$Lumentum(LITE)$ finally broke out of a months long downtrend, bouncing off of hard support near 600. Through 1000 and bulls will push it straight into 1140, and a $100B MCAP. If Pax Silica can't secure a viable alternative to Chinese strategic rare earths,
$Lumentum(LITE)$ can fade hard back towards 600 over the span of months
Key Catalysts
FCC transceiver ban drafting: Reuters reported the FCC is drafting a ban on new Chinese optical transceiver models.
$Coherent(COHR)$ and $Lumentum(LITE)$ are the named beneficiaries if Chinese Innolight and Eoptolink get locked out of US hyperscaler orders
Q4 print blew through guide: Revenue up 109% year over year on AI datacenter optics, Q1 guide of $1.225-1.275B, and at least one analyst has already slapped a $1,300 target on the name
Indium phosphide is the trap door: Beijing controls the export of the indium phosphide that goes into $Lumentum(LITE)$ own lasers. Pax Silica was built to route around exactly this kind of chokepoint, and it hasn't. China supplies the input and dominates the finished module market at the same time
Trade Ideas
$Lumentum(LITE)$ above 1000
Day Trade: 8/21 1100C
Swing Trade: 9/18 1300C
The FCC ban is the headline, the indium supply chain is the real story. Watch 1000 to see which narrative the market believes first
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