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19 Aug 2025
But stock drops 10% as the contract manufacturer warns of temporary supply constraints.
Fabrinet, the Thailand-headquartered contract manufacturer that produces optical devices used by the likes of Nvidia, Cisco Systems, and now Amazon Web Services (AWS), has posted record-breaking annual sales of $3.4 billion.
Up 19 per cent on last year’s total, that figure was boosted by higher-than-expected revenues in the Bangkok firm’s latest financial quarter, which reached another record total of $910 million.
Capacity constrained
Discussing the current ramp in demand emanating from artificial intelligence (AI) data center investment, Fabrinet CEO Seamus Grady told an investor conference call:
“We had an excellent fourth quarter ending an outstanding year with tremendous momentum. We navigated a significant product transition at a major datacom customer, while our telecom business and overall revenue reached record highs.
“Robust customer demand across our business leaves us better positioned than ever to capitalize on the many significant opportunities ahead of us.”
Grady added that multiple growth drivers were now pushing Fabrinet towards quarterly revenues of $1 billion, with the firm looking to accelerate the completion of part of its giant new “Building 10” facility in order to meet booming customer demand.
Despite that positive demand environment, which now includes a significant deal with AWS driven by high-performance computing requirements, and little anticipated impact from new US trade tariffs, Fabrinet’s stock price dropped in value by around 10 per cent following the latest update.
That was possibly a response to warnings from Grady and his team that supply constraints would temporarily restrict the firm’s shipments of new 1.6 Tb/s optical transceivers over the next few months.
“With demand still increasing, we are very optimistic about datacom growth trends for fiscal 2026,” stressed the CEO. “[But] in the near term, this surge in demand has created some temporary component supply challenges, which we are working closely with a major customer to overcome.”
No tariff impact
While optical transceivers represent Fabrinet’s cash-cow product lines, the company also makes industrial lasers, with sales of the latter rising 24 per cent year-on-year to $153 million.
The strong market conditions also saw the firm post increased profits, with pre-tax income of $93 million in the latest quarter up from $85 million year-on-year. For the full year, pre-tax income of $355 million was up from $311 million a year ago.
Asked about the likely impact of US import tariffs, Grady said that the company had not seen any meaningful impact thus far, and pointed out that its current shipping agreements dictated that the receiver or the customer would be responsible for paying them.
“So we don’t bear the cost of the tariffs,” he clarified. “And the products we make, both in the optical communication space and the non optical communication space, those categories are not necessarily shipped directly to the US.
“They may be shipped to Asia or Europe, or elsewhere to another contract manufacturer for higher-level assembly.”
• Following the company’s latest update, Fabrinet’s stock price fell in value by 12 per cent. But at around $288 in pre-market trading on August 19, the stock remains close to its all-time high reached last month, and equates to a market capitalization in the region of $11 billion.
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