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Investing.com -- Shares of Applied Optoelectronics (NASDAQ:AAOI) fell 7% after a report by Culper Research accused the company of grossly misrepresenting its prospects in the 800G transceiver market. The report, which involved interviews with former employees, competitors, hyperscalers, and industry experts, as well as site visits, suggests that Applied Optoelectronics has exaggerated its ability to scale 800G production and has likely lost potential customer opportunities.
Culper Research’s investigation indicates that despite claims of shipping 800G samples to customers in the third quarter of 2023, these samples were not ready until much later. A former employee from Meta (formerly Facebook (NASDAQ:META)) stated that Applied Optoelectronics promised 800G samples within three quarters, but by the time the samples were available, the request for quotation (RFQ) had already closed.
The report further alleges that Applied Optoelectronics has not disclosed any 800G customer and has postponed its revenue expectations from this technology by three quarters. In addition, the company’s claim of re-engaging with Amazon (NASDAQ:AMZN) and being ready to ramp up production was met with dissatisfaction from the e-commerce giant, according to sources who claim Amazon was angry after Applied Optoelectronics failed to deliver on its production promises.
Culper Research also challenges Applied Optoelectronics’ portrayal of its relationship with Microsoft (NASDAQ:MSFT), suggesting that revenue from Microsoft has been limited to lower-end products and cables, while Microsoft has been deploying 800G transceivers from other competitors.
The report casts doubt on Applied Optoelectronics’ manufacturing capabilities, citing failed attempts to sell its Chinese manufacturing assets and an empty expansion site in Taiwan. Experts consulted in the report believe that significant U.S. production is unlikely due to higher costs and labor rates, contrary to CEO Lin’s claims of feasibility.
Applied Optoelectronics has not yet responded to the allegations made in the Culper Research report. The stock’s decline reflects investor concerns over the company’s ability to compete and scale production in the critical 800G market, which is key to the future of data center and telecommunications infrastructure.
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