Research: AI Optical Interconnect Drives US Firms to Expand Southeast Asia Outsourcing, Taiwanese Manufacturers Vie for Orders

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Press Release Information Title: Research: AI Optical Interconnect Drives US Firms to Expand Southeast Asia Outsourcing, Taiwanese Manufacturers Vie for Orders Subtitle: Company Name: Body (first 8000 characters): ASEAN Financial Special Report (total 300 articles)

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(Central News Agency reporter Pan Chih-yi, Taipei, 5th) Research firm TrendForce points out that global optical transceiver module shipments will more than triple from 26.5 million units in 2023 to 92 million units in 2026. Optimistic about the AI optical interconnect business opportunities, this will drive US companies to expand their outsourced production to Southeast Asia, allowing Taiwanese manufacturers with factories in Southeast Asia to capture orders from non-red supply chains.

TrendForce states that the huge market opportunities and geopolitical factors are driving the global optical communication supply chain into a period of restructuring, further prompting major US manufacturers to accelerate their outsourcing strategies in Southeast Asia, opening up opportunities for non-traditional optical communication technology companies to enter the artificial intelligence (AI) optical communication field.

TrendForce explains that in the global optical communication market, Chinese suppliers have been in a dominant position for many years, relying on their mature, massive scale and cost advantages, especially in high-volume general areas such as Ethernet transceivers and FTTx. The cost competitive advantages of Chinese companies such as Innolight and Eoptolink are difficult to shake.

In contrast, TrendForce assesses that although US optical communication manufacturers benefit from AI applications and can maintain a certain market share, they mainly concentrate on high-value-added high-speed dense wavelength division multiplexing (DWDM) and coherent optics segments, which do not cover all the large-volume markets for pluggable optical transceiver modules. Therefore, in standardized products with large volumes, Chinese manufacturers still hold the dominant position.

TrendForce says that with cloud service providers (CSPs) massively building data centers, the demand for high-speed pluggable optical modules such as 800G and 1.6T is growing rapidly, prompting major US optical communication manufacturers such as Coherent and Lumentum to initiate strategic shifts. They are moving from primarily relying on their own production capacity to a higher reliance on outsourcing models, accelerating production expansion and diversifying supply chain risks.

TrendForce points out that considering supply chain risk management and the trend of establishing production bases outside of China, major US optical communication manufacturers, when looking for contract manufacturing partners, often prioritize technology companies that have already established factories in Southeast Asia. This shift of production capacity to a "non-China supply chain" benefits Taiwanese technology companies with manufacturing and assembly capabilities in Southeast Asia, enabling them to successfully undertake a large number of spillover orders.

From a technological development perspective, TrendForce explains that as copper interconnects will face signal integrity and power consumption bottlenecks at higher transmission speeds, silicon photonics and co-packaged optics (CPO) architectures have become the medium-to-long-term development direction for optical communication technology, attracting many technology giants not originally focused on the optical communication industry to actively position themselves.

TrendForce believes that this means the future focus of competition will shift from simple assembly capabilities to the ability to integrate front-end wafer processes and advanced packaging platforms. Unlike traditional optical communication, which focused on simple module assembly, silicon photonics and CPO emphasize building an integrated platform around wafer processes and co-packaging technology; "how to make good use of the existing semiconductor industry structure" will become a key threshold for new technology companies to enter the AI optical communication field. (Editor: Chang Chun-mao) 1150505

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