Update CPO Assumptions, Reiterate TFC As Key Beneficiary CITI'S TAKE We extend our exercise of CPO (co-packaged optics) TAM assessment to 2028, while keeping our CPO switch forecast of 300/5k/209k units in '25/26/27E and preliminary forecast of c.691k units in '28E (100k scale-out, 591k scale-up). We apply the updated assumptions like CPO switch spec and config, and the derived TAM for FAU/ELSFP/fiber shuffle/fiber tray could reach Rmb10.4bn/29.6bn/89.6bn/55.7bn in 2028E. We reiterate TFC as one of the majo ...

Group 1 - FormFactor, Inc. announced the acquisition of Keystone Photonics to enhance its capabilities in silicon photonics and co-packaged optics for wafer testing [1][2] - The acquisition is a strategic move to meet the increasing demand from AI data centers for faster data communication with lower power consumption [2] - Management expects silicon photonics to grow at a CAGR of 30% until 2029, positioning FormFactor favorably to support manufacturers transitioning to high-volume production [4] Group 2 - Wall Street analysts maintain a positive outlook on FormFactor, with Craig-Hallum and B. Riley Securities reiterating Buy ratings and raising price targets from $66 to $78 [5] - FormFactor provides essential test and measurement technologies throughout the semiconductor lifecycle, including solutions for quantum engineers [6]

Core Insights - FormFactor, Inc. has announced the acquisition of Keystone Photonics, enhancing its capabilities in optical probing technology for silicon photonics and co-packaged optics wafer testing, which are essential for next-generation data centers focused on AI and high-performance computing [1][2] Company Overview - FormFactor, Inc. is a leading provider of semiconductor test and measurement technologies, supporting the entire IC life cycle from characterization to production testing [4] - The company operates a network of facilities across Asia, Europe, and North America, providing essential products and services to semiconductor companies [4] Industry Context - The silicon photonics market is projected to grow at an annual rate of nearly 30%, driven by the increasing demand for AI infrastructure [2] - The acquisition positions FormFactor to leverage its integrated test system leadership and unique lab-to-fab capabilities as manufacturers transition from concept to high-volume production [2] Strategic Implications - The combination of FormFactor and Keystone Photonics aims to address the complexities of optical wafer testing, enhancing data accuracy and testing speed through advanced optical coupling technology and automation [3] - The leadership of both companies expresses a shared vision to accelerate the ramp-up of high-volume silicon photonics and co-packaged optics production, responding to the evolving needs of data centers influenced by generative AI and advanced packaging [4]