This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
you know, does your data center chip business also sort of contribute to that? I would, I would think yes. And then I also heard some other areas as well across the laser and photonics portfolio. So could you just clarify that, that that's accurate? And is there any, was it super early days? Was there any way the context for us, you know, kind of, What portion of the overall portfolio has some exposure in any way that's useful? And then I have a quick follow-up. Thanks a lot.
spk04
Yeah, thanks. Yeah, I would go back to that in the nearer term. It's the data center chip business, as you alluded to, which both has, you know, what we've been known for, high-speed EMLs transitioning to higher speed. But also the addition of high-speed Vixels and the growth of high-power CW lasers used for silicon photonic architectures. So those are what I referenced as more nearer term as in the next 10 quarters. As we look to the next couple years, we anticipate the data center architectures will evolve to more application-specific equipment, if you will, and that application-specific equipment will have, you know, maybe in addition to the standard Ethernet-type connects, more proprietary interconnects using, in a sense, custom-designed transmission links, and that's where our engagement with leaders in the space is really important. Taking our broader photonic capabilities around lasers and transmission in general, as well as in some cases optical switching, all will be brought to bear. So it does impact a more broad piece of our company than just the datacom or data center business that today is the primary driver.
Vixels
Maybe I can add to that as well. Just one other thing to add to Chris's commentary is, you know, we've seen very strong demand for our subsea cable deployment where we provide components that amplify the signal on the bottom of the ocean. So we're seeing a lot of the demand for subsea coming from the hyperscalers as they connect those large data centers. And whether that's a precursor to expectations on AI or machine learning or not, it is an area that we've seen strong demand. And these are big investments that take a year or more to deploy. So I think we're seeing some leading indicators that this is an area of growth for us as well.
Operator
Alan, thanks for that. And I guess the quick clarification is, Just given the guidance for the June quarter, kind of telco, datacom, slightly up, slightly up here. Are you essentially calling kind of the bottom here, June quarter, in your telco, datacom business combined? And should we think of flattish through the remainder of the year until demand picks up? Thanks. That's it for me. Thanks.
Vixels
Yeah, we're reluctant to guide more than one quarter at a time. You know, we are seeing some strength in the June quarter on coherent components for high-speed coherent modules. And whether that continues into the September and December quarter, it's hard to say. We are expecting kind of a continued level of revenue or I should say inventory digestion and certainly in the September quarter and then partially into the December quarter. So it's, I would say, a flattish kind of outlook. But, you know, we'll give you more input on that in August when we have our next call.
spk00
Thank you, Ananda. Bruno, I think we have time for one more question and then we'll turn it over to Alan for some final remarks.
Ananda
Perfect. Our next question comes from Mike Genovese from Rosenwald Securities. Mike, your line's now open. Please go ahead.
Mike Genovese
Okay, great. Thanks for getting me on the call. Just, can we get specific color on Datacom? You know, I think an inventory correction started a couple of quarters ago, so the question is, is the inventory correction over, but, you know, now there's sort of some order pushouts in the cloud or, you know, any color you can give us on specific to the Datacom business would be helpful. Thank you.
Vixels
Yeah, Mike, I'll give you my perspective and then maybe Chris can chime in. Yeah, it has been the past few quarters where we've been talking about a slowdown in Datacom and inventory build at the cloud providers, hyperscalers, you know, as they were ordering several quarters in advance because of the shortages in calendar 2022. They were ordering or some of them were ordering at an expectation that they would grow at a certain rate in the 30 to 40 percent range. And as they've announced, their growth rates are significantly lower than that. It takes longer time to burn off that inventory than originally expected. So we're seeing the inventory burn off. still some customers and some of our module manufacturers still, you know, a quarter or more of inventory there. And our expectations are that the demand for AI and machine learning will help the consumption of this inventory so that, you know, by the end of the calendar year, we'll start shipping into the data com market more like the end market consumption. But in the interim, you know, there's still inventory in the channel there.
Mike Genovese
Okay, great. And then my follow-up or, you know, separate kind of question on commercial industrial lasers. You know, the first half of this year had some pretty tough compares, you know, so going into, you know, next year at a lower run rate. But, you know, so how do you, how should we think about year over year in 24 in that business?
spk04
Yeah, thanks, Mike. I would say we're going to see, as we highlighted in the prepared remarks, that lasers will come down a little bit, given it's tied to, as Alan highlighted, semiconductor and markets, as well as macro manufacturing, if you will. So we believe that it will come down in the next several quarters. Obviously, it was kind of ramping up through the year, but in the net, we suspect that, at least as we look to customer forecasts at this point, that FY24 will be lower than FY23 was for commercial lasers directionally.
Mike Genovese
Okay, great. Thanks. I didn't want to be the dead horse on the 3DS, so I appreciate the call around the other segments. Thank you.
spk00
Thank you, Mike. I think now we'll turn the call back over to Alan for some closing remarks.
Vixels
Thank you, Kathy. I would like to leave you with a few thoughts as we wrap up this call. Mid- to long-term fundamentals remain intact for our business as we serve the exponential growth in network bandwidth and artificial intelligence machine learning, mobile, carrier, and cloud computing markets. New automotive and industrial applications are emerging for our imaging and sensing products and applications for commercial lasers are expanding into new applications beyond our traditional markets. We remain committed to investing deeply in innovation to deliver on customer needs today and in the future. With that, I would like to thank everyone for attending and we look forward to talking with you again at investor conferences and upcoming meetings in the coming weeks. Thank you and have a great day.
Ananda
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you. Connect your lines. Thank you.
Disclaimer