AMD Enters the Optical Communications War Seeking Laser Chip Supplies and Advanced CoWoS Packaging Capacity to Challenge Nvidia in AI Server Interconnects
Through investment in high end packaged laser and external laser source light pluggable module by Nvidia, supply chain sources reveal that AMD officially joined this communications capacity war in the optical segments. AMD is now actively looking forward to purchasing high power MW current laser chips along with external laser source front pluggable modules to scale up optical interconnection architecture for future A I server with full capacity security.
Market analysts are watching this trend as the number of AI clusters around the world continues to grow rapidly. The explosion of high end architecture vendors such as co packaged optics and optical backplanes has caused massive pressure on the global supply chain for indium phosphide substrates, continuous wave lasers, electro absorption modulated lasers and photodetectors. Analysts such as SICC and Weber also note that semiconductor giants are turning away from transactional short term buying behaviors towards multi year capacity agreements with leading optical component manufacturers.
For its next generation accelerators and high speed interconnect systems, AMD has ramped up its orders for advanced packaging substantially. Early supply chain forecasts for the coming manufacturing cycle show a dramatic shift in the packaging allocation. While Nvidia continues to be the largest customer with an expected allocation of 1,222,000 wafers (up 57%), AMD is catching up fast with an expected allocation of 530,000 (up an incredible 308%). AMD now surpasses Broadcom, with an expected allocation of 484,000 wafers.
However, access to packaging capacity is only one issue. The optical data transmission speed is now the single factor determining high performance computing speed. Nvidia locked their next few quarter’s worth of high performance computing output by obtaining a 2 billion dollars capacity guarantee from both of the giants Coherent and Lumentum who guaranteed them their throughput for the next several quarters forcing AMD onto search for another set of independent manufacturing optical suppliers.
According to industry sources, AMD is in negotiation with Applied Optoelectronics Incorporated (AAOI). With a severe material shortage and capacity limitation across the sector, AAOI is in an advantageous position offering in house laser manufacturing facilities, something no other rival supplier is able to do having already sold out manufacturing lines well into the next fiscal year.
AAOI will be expanding operation very quickly to catch up to this demand. The device has a monthly target of 650,000 units for the current active cycle for the 800 G and 1.6 T transceivers set by the manufacturer. With this target expected to increase by at least 930,000 units but potentially 1,000,000 by the end of the next production year. Since AAOI has already committed to its production line to existing customers for the second quarter of the next fiscal year, AMD will need to sign high purchase agreements from the immediate quarter to ensure its capacity for the third quarter.
We expect AMD's bold advances into optical communications to drive heavy business for niche suppliers in the entire hardware ecosystem. Makers of high speed optical module PCBAs and advanced fabrication process providers will stand to gain. Niche optical substrate manufacturers, high speed boards for 800G plus applications and advanced epitaxy companies are witnessing a swell in long term contracts and on demand orders as the industry pivots toward meeting the hardware requirements of the blue chip AI boom.
