AI boom strains optical supply chain as Nvidia, Corning expand fiber output

The AI compute arms race is shifting bottlenecks from silicon chips to photonic infrastructure. Nvidia and Corning’s fiber capacity expansions respond to surging demand for 800G/1.6T optical modules—copper interconnects have hit bandwidth limits, making optics unavoidable. This accelerates TSMC and Intel’s push into Co-Packaged Optics (CPO), while firms in Taiwan, China and mainland China face heightened U.S. export controls on high-NA fibers and low-loss coatings. Near-term, Lumentum and Coherent will leverage pricing power; longer-term, a Sino-U.S. photonics standards split could inflate global data center TCO by over 15%. Over the next 18 months, a 'silicon-photonics scramble' will unfold: startups attract capital, but yield and packaging co-optimization remain existential hurdles.