- Ciena braces for $10M quarterly hit amid Trump tariff uncertainty
- Tariff costs may be passed along to customers, execs noted on the Q2 call
- Ciena also scored an 800G cloud win to connect GPU clusters
The state of the Trump tariffs is still very much in the “will they, won’t they” phase, but Ciena is nonetheless prepared for a financial impact.
CFO Jim Moylan said Thursday Ciena expects the total cost of tariffs to be approximately $10 million per quarter, “assuming that the current tariff structure does not change.”
The Trump administration’s “Liberation Day” tariffs, if sustained, spell bad news for vendors with manufacturing footholds outside the U.S. Ciena has said most of the products in its supply chain come from Canada, Mexico, India and Thailand.
The $10 million estimate falls in line with fellow vendor CommScope’s tariff predictions. CommScope in May said it anticipates a $10-15 million impact primarily affecting its Ruckus business.
Ciena execs on the Q2 earnings call didn’t specify which of its businesses would be hit the hardest, but Moylan noted the company does have contingency plans in case tariffs go up.
“We could move manufacturing operations, we could change some flows in our supply chain,” he said.
But will Ciena pass along tariff costs to consumers? “It’s going to be a complicated situation,” Moylan admitted.
“Not in all cases are we going to actually pass a tariff along to them,” he said. “Some cases it might result in supply [price] increases, general price increases, etc.”
800G ripe for picking
Tariff talk aside, Ciena sees a bright future in 800G coherent optics that can accommodate AI traffic.
CEO Gary Smith said on the call a global cloud provider has selected Ciena’s coherent 800-gig pluggables and Reconfigurable Line System (RLS) photonics for “investing in geographically distributed, regional GPU clusters.”
“With our coherent optical technology ideally suited for this type of connectivity, we expect to see more of these opportunities emerge as cloud providers evolve their data center network architectures to support their AI strategies,” he added.
Dell’Oro analyst Jimmy Yu noted on LinkedIn Ciena’s data center interconnect win is the first he’s heard of that involves connecting GPU clusters across 100+ kilometer spans.
“It was a hot topic of discussion for nearly 2 years. It is now going to start,” Yu said.
It’s still early innings for 800G adoption, but demand is climbing due to AI and cloud connectivity. Indeed, we can expect to see “a measurable increase” in 800G installations this year, according to Vertical Systems Group.