- AOI is building a new plant as it anticipates a surge in 800G transceiver orders
- It’s already snagged Amazon and another unnamed hyperscaler customer
- Aside from optics, AOI makes ‘smart’ amplifiers for cable operators like Charter
As hyperscalers hunger for 800 Gbps bandwidth, optical vendor AOI thinks it’s well-equipped to meet that demand.
AOI plans to ramp its production of 800 Gbps transceivers for data centers by constructing a new 210,000-square foot facility at its Sugar Land, Texas headquarters, CFO and Chief Strategy Officer Stefan Murry told Fierce. The plant will also be used to make 1.6 Tbps transceivers once the company sees more orders come in.
“The manufacturing process that we have developed and the design of the 800G and subsequently 1.6-terabit transceivers is very similar,” he said, meaning AOI can produce either on the same production line.
AOI currently expects to reach a production capacity of over 100,000 800G units per month by year-end, with the new plant to be completed in 2026.
“The initial target is 800G, because I think that’s where most of the volume next year is going to be,” Murry said.
It’s a reasonable assumption, given how hyperscalers are increasingly interested in coherent optical transceivers for data center AI clusters. Dell’Oro has projected vendors to collectively ship over 5 million coherent transceivers in the coming years.
AOI already scooped up Amazon as one of its hyperscale customers. The company in an SEC filing disclosed it inked a $4 billion contract over the next 10 years with a wholly owned Amazon subsidiary.
Murry explained AOI agreed to sell a certain amount of stock “in exchange for up to $4 billion of aggregate business from Amazon, mainly around their data center infrastructure.”
He said Amazon hasn’t publicly commented on what AOI equipment it plans to buy, and that while it’s “certainly a possibility” the hyperscaler could ask for 800G transceivers, this deal “isn’t tailored directly to one data rate or another.”
AOI in June also announced its first volume shipment of high-speed data center transceivers to an unnamed “recently re-engaged major hyperscale” customer. It’s unclear whether that’s Amazon or another company, but AOI noted the shipment is the first of “significant quantity to this customer in several years.”
But just because data center operators are eager for 800G and 1.6 Tbps capacity, that doesn’t mean there won’t be a need for 100G and 400G transmission rates, Murry said.
“The reality is certain applications will move to those higher data rates very quickly, but there’s still a lot of demand for the other parts of the network that utilize slower speeds,” he explained, adding 100G and 400G are more geared towards “general purpose applications.” Think ChatGPT and other consumer-facing AI tools.
Basically, lower-capacity transceivers still need to be deployed alongside their higher-speed “AI-focused counterparts, to be able to serve up the services that people are using,” said Murry.
AOI’s cable biz
Aside from optical, AOI makes amplifiers and other equipment for the cable industry.
The company has supplied gear to multiple-systems operators (MSOs) for about two decades, but three years ago it began marketing under the Quantum Bandwidth brand, Murry said. That’s because AOI up until that point was an Original Design Manufacturer (ODM), making amps that other vendors would sell.
“I guess you could say we’re a new name a little bit in cable, because the MSOs didn’t necessarily know us when we first made that transition,” he said.
But AOI now has Charter as a sizable cable customer. Charter plans to use AOI’s 1.8GHz amplifiers and line extenders for its DOCSIS 4.0 network upgrades.
Murry noted AOI’s amps are “smart,” meaning they’re capable of proactive maintenance and can diagnose network issues. Smart amps, which can be embedded with AI, are starting to see more real-world deployments, as CommScope recently told us.
In Murry’s view, smart amps are a big deal because cable operators for a long time had “very little visibility” into their network operations, resulting in headaches whenever they had to deal with an outage or other issue. The smart amp aims to identify the problem and potentially solve it before the customer ever notices something’s amiss.
The first smart amp deployments only started “within the last 18 months or so,” he said. “There may have been a few small pilot deployments or things like that, but in terms of scale it’s really been relatively recently. And I think that’s a big step for MSOs.”