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Coming out of nowhere, based on fibeReality’s most recent intelligence, the hyperscalers and NVIDIA are purchasing all the 800G gear in sight (please see: https://lnkd.in/gH5e5GaY). This development was not prognosticated by anybody, including the optics industry cheerleaders. Undoubtedly, the earlier inventory buildout by large users helped to obscure this dramatic change, as the eventual requirement for NVIDIA to farm out in a big way for such equipment, otherwise would have immediately left a greater impression. The largest transceiver suppliers (please see: https://lnkd.in/g_esDRGN) are apparently scrambling to keep pace with demand that could conceivably continue into 2024 as well as into 2025, as the massive training systems for AI have hardly turned out to be hype regarding their impact on the optical device market. In fact, they are providing an unparalleled opportunity for growth. Any point of moderation that would be expected to inevitably take place, simply cannot be predicted right now. We are indeed in “uncharted territory” (please see: https://lnkd.in/eAQbuhjT).

In the last 40 years of the optical components/systems marketplace, there has never been an aberration to occur of this magnitude. Even with the arrival of the Internet in the 1990s, the positive effect on the growth of bandwidth was still diminished with so many of the largest customers across the world still being shackled by the continuing existence of government regulations. Also, the financial community very mistakenly treated them as just a bunch of dotcoms, rather than as traditionally conservative in their planning efforts, resulting in the bubble bursting around the turn of the century. The cloud services providers are among the most successful entities in the history of business, and their optics purchases apply to their private, internal networks. Most significantly, the emergence of AI creates a substantially heightened level of direct competition amongst these players, in which for the first time, they may even be faced with an existential threat, if they do not become sufficiently differentiated, including for their individual requirements in that optical sector (please see: https://lnkd.in/eSQPkTsr).