Nvidia dual-sourcing was expected and is already being replaced by hyperscaler and merchant programs as capacity and OCS ramp into 2027.

Fabrinet expected Nvidia to add 400G and 800G transceiver suppliers and is already shipping replacement hyperscaler and merchant 800G short-reach programs, with 1.6T later and a second merchant vendor starting production in the December quarter. Optical circuit switching is shipping to one customer and in development with several others, a 12-18 month ramp and a 2027 growth story. NPO and CPO can raise the margin ceiling even at lower ASPs, while FY27 capex stays near $250m and capacity scales from about $5.8B toward $9.8B by early 2027. Soft Q1 EPS is mainly a 20-30 bps merit-increase hit plus Q4 one-time income rolling off, expected to be recovered through efficiencies.