Networking optics are mission-critical components in advancing AI and data center infrastructure build-outs. To move the massive amounts of data required for AI training and inferencing, hyperscalers and other data center operators need increased access to optical transceivers capable of rates of 800 gigabits per second (Gbps) or even 1.6 terabits (Tbps) per second and higher.1 But these crucial components could be in short supply in the near term: Production of 800-Gbps transceivers is expected to fall 40 to 60 percent short of demand through 2027, and 30 to 40 percent shortfalls in the supply of 1.6-Tbps transceivers are likely to persist through 2029, according to McKinsey analysis.
Addressing these shortages will require industry standards, collaboration, capacity scaling, and significant investment of capital expenditure to ensure the necessary capacity by 2030.2 The amount of capital expenditure needed depends on where the data center is located and the type of construction involved—retrofitting, new build, or expansion. This article explores current trends in networking-optics technology as well as the market factors affecting production of higher-data-rate transceivers. It illustrates how industry leaders could act today to ease bottlenecks in component supplies and help enable the continuous build-out of the infrastructure needed to support growing AI adoption.
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