Is the next focus of AI investment “connectivity”?! Over 80 …
This contract suggests a growing need to secure optical fiber supplies years in advance to increase communication line capacity.
However, optical fiber alone is insufficient for connecting data centers. Transmission equipment to carry signals, components to generate light, and semiconductors to process received signals are also required. The growth opportunities in DCI (Data Center Interconnect) extend across this entire range of infrastructure.
As GPU counts increase, securing power and installation space becomes more difficult. Distributing computing resources across multiple data centers, in turn, creates the need to exchange large volumes of data between sites.
Particularly in “scale-across” training, where a single AI model is trained using GPUs across multiple sites, communication latency and congestion can reduce computational efficiency. There is a demand for networks that connect remote sites with sufficient bandwidth and stable, low latency.
Investment is moving in two directions: “increasing optical fiber to secure communication routes” and “increasing the amount of information that can be carried over a single fiber.”
First, increasing the “paths for light”
Optical fiber is a medium that carries data as light signals. Numerous fibers are housed within cables and laid between sites.
Growth in this sector is not determined solely by installation distance. Opportunities for revenue growth also arise from increasing the number of fibers per cable, adding more connection points, and shifting toward high-density products. The ability of each company to secure orders and ramp up production is crucial to converting these opportunities into profit.
Next, “equipment for transmitting large volumes of data”
Optical transmission equipment is what operates installed optical fibers as a communication network. It uses different wavelengths of light to carry multiple signals simultaneously and controls transmission based on distance and required capacity.
When evaluating both companies, it is more important to focus on when customers will activate their lines and to what capacity they will upgrade, rather than simply looking at the volume of optical fiber purchases.
Optical components constituting transmission equipment are also subject to demands for performance improvements.
As traffic volume increases, demand for transmission and reception components rises. Furthermore, miniaturization and higher performance are essential to carry large capacities within limited space and power constraints. Both companies have two growth opportunities: volume expansion and product sophistication. However, since many products are destined for internal data center use, overall company growth cannot be explained solely by DCI trends.
In optical communications, advanced processing is required to handle issues such as signal distortion occurring during long-distance transmission. The core semiconductor driving this capability is the DSP (Digital Signal Processor).
