Credo Agrees to Acquire DustPhotonics, Accelerating Expansion into Silicon Photonics and Next Generation Optical Connectivity
Acquisition will bring industry-leading Silicon Photonics PIC technology in-house, expanding Credo’s addressable market and deepening its optical interconnect portfolio across 800G, 1.6T, and 3.2T NPO and CPO.
CRDO up 11% after the announcement.
Press Release: April 13, 2026
I thought that Credo already had a SiliconPhotonic technology based on their previous optic transceiver products, but it seems like they don’t have it yet until now?
I thought the best quote from the press release was this little tidbit, “Credo believes it has reached an inflection point in its optical business. With the addition of DustPhotonics, the company expects its combined portfolio of ZeroFlap Optical Transceivers, Optical DSPs, and Silicon Photonics products to generate greater than $500 million in optical revenue in fiscal 2027, reflecting strong customer traction and expanding adoption across hyperscale AI deployments.”
maybe they are being direct, but this management team has tended to understate a lot and sandbag. Looking forward to some great optical growth!
Credo has had optical products in the works for many years and Zero Flap Optics is now in production. Fiscal year 2025 (1.5 years ago) had over 10% of revenue coming from optical products already.
This quote is from the CEO back in December of 2025 at the Barclays conference. It says that Oracle asked them for this solution 20 months ago. Highlighting some details of their innovation,
So ZF optics, ZeroFlap optics, so the ZeroFlap theme is ultimately speaking, to reliability. So we had Oracle approaches about 20 months ago. And they were struggling also with link flap, same as xAI. We say, use AECs, and they saw our links are too long, far longer than 7 meters.
And so we’re going to have to deal with laser-based optics by definition. And so he said, we’d love to work with you on a solution where we go up the stack together. And the idea is, could you design a system solution where you could provide visibility and telemetry on every single link in the cluster to the point where you could determine the link health on all of the links, so you’ve got 1 million GPU cluster, could you have a system where all of that telemetry data is being fed real time into the networks of management software so that you could set a threshold and when you saw a link that started declining from a signal integrity standpoint, could you set a threshold where they cross that threshold, could you actively take that link down? Could you take that GPU out of the cluster to avoid the link flap? And so the whole goal was to design a system-level solution to be able to recognize potential link flaps before they flap and to mitigate by taking them out of the cluster, taking the link down.
And so it started with us having to redesign a custom optical DSP with the ability to talk between the DSPs in band. So while we’re transferring high-speed traffic, could we talk back and forth between DSPs and enable this telemetry data. The next thing was taking our pilot software and tightly coupling it so that we could basically take this raw data and turned it into telemetry data. And then it was linking with an SDK through a switch SDK to be able to integrate within the customer’s network. And so now we’re able to give them real information real time continuously on iHeight-S&R prefect bit error rates, post-tech histograms.
We’re able to recognize if there’s ESD damage. This is a super common source of failure that while they’re installing the racks, if you mishandle a transceiver, you can slightly damage it with ESD, we can recognize and they can replace that proactively as they’re turning on the rack the first time. We can recognize that there’s dust on the fiber. So you’ll get multipath interference because if you got dust, the light will bounce the other direction, which causes havoc single integrity standpoint. So far beyond any kind of system solution for laser-based optics module.
And so it’s – we recognized that we would have to go up the stack and we’d have to own the entire solution. We’d have to be accountable for the entire solution. So it started to feel just like AEC in that sense. And so that’s the path that we’re on. We’re not competing for kind of standard modules.
This is being designed at the ground up. I don’t expect that we’re going to be the only supplier in this space. My expectation is this is delivering such value that we’ll have others come and join ZeroFlap optics solutions.
Based on what Credo is saying here I believe they have significant innovation over other optical providers, looking to actually address the reliability issues that optics struggle with currently. It is a competitive advantage that Credo has solutions outside of optics as well, knowing full well what the trade offs are. This way they can figure out the appropriate solution for their customers. Credo sells both optical and copper products to Oracle depending on what scenario they are addressing.
It has been frustrating to see Credo sinking stock price while other optical providers with lower margins and lower profitability were rising every day. The market has seemed completely oblivious to Credo having optical products in production so far, but maybe this acquisition is bringing some attention their way.
With the 500M+ of optical revenue in fiscal 2027, I am expecting this to be a low bar for them. Last quarter was Q3 fiscal 2026, and there is still Q4 coming up. The calendar months for fiscal 2027 are July 2026 - June 2027. I’d be surprised if they are only getting 125M average per quarter from optical in that time frame.