AI Optical Transceiver Demand Continues to Grow Rapidly, but Supply Bottlenecks and Price Declines Coexist

Overview

This report is Nomura's Global AI Trend Tracker AI Expert Call #65, based on a conversation on April 16, 2026 with an expert from a leading optical communications company. The core discussion covered demand for optical transceivers related to AI data centers, pricing trends, and market progress in new optical interconnect solutions such as XPO, OCS, CPO, and NPO.

Core views

The core message of the report is that AI compute infrastructure is still driving rapid growth in demand for 800G and 1.6T optical transceivers, but near-term actual shipments are below potential demand, mainly constrained by shortages of key components such as EML chips, isolators, and filters. At the same time, optical module prices remain on a downward trajectory: in 2026, 800G prices are expected to fall about 10% year over year and could continue declining in 2027E; 1.6T prices may also see declines of more than 10% after yields improve. On the OCS side, Google is the current main adopter, and NVIDIA's next-generation dragonfly architecture may combine OCS and CPO to form a two-layer all-optical interconnect.

Analysis framework

The report uses expert interviews and industry supply-demand tracking, breaking down 2026E and 2027E demand, shipments, customer mix, product formats, and pricing, and discussing 800G, 1.6T, XPO, and OCS separately.

Methodology notes

• 专家访谈AI Expert Call

  Obtain judgments on supply-demand conditions, pricing, and technology roadmaps across the industry chain through an industry expert call.

  This article is based on the views of an expert from a leading optical communications company; the data are expert estimates and are suitable as a reference for industry tracking rather than as a basis for formal financial forecasts or ratings.

• 供需跟踪Demand vs Shipment Tracking

  Differentiate end-market demand from actual shipments.

  The report separates potential demand for 800G/1.6T from shipment volumes constrained by component shortages, emphasizing the impact of supply bottlenecks on the revenue realization pace.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• COHERENT CORP (COHR.US)

  An OCS supply-chain-related company; the report mentions that part of Google's OCS demand will be outsourced to Coherent.

  Strengths

  May benefit from Google's outsourced OCS demand and AI data-center optical interconnect upgrades.

  Weaknesses

  The report does not provide company financial forecasts or order confirmation, and total OCS demand is still in an early ramp stage.

  Comparison

  Along with Lumentum, it is mentioned as a potential beneficiary of Google's outsourced OCS demand.

  Risks

  A high degree of in-house development at Google, price declines, yield changes, and customer negotiation timing may affect earnings realization.

• LUMENTUM HOLDINGS INC (LITE.US)

  An OCS supply-chain-related company; the report mentions that part of Google's OCS demand will be outsourced to Lumentum.

  Strengths

  Can participate in the growth of AI data-center OCS demand.

  Weaknesses

  The report does not provide a formal rating or target price; whether demand can convert into revenue still needs to be tracked.

  Comparison

  Mentioned together with Coherent as a potential supplier for Google's outsourced OCS demand.

  Risks

  Customer concentration, Google's in-house development ratio, technology roadmap changes, and pricing pressure.

• NVIDIA CORP (NVDA.US)

  One of the main sources of 1.6T optical transceiver demand and may combine OCS and CPO in the next-generation dragonfly architecture.

  Strengths

  Upgrades to AI cluster network architecture drive demand for high-speed optical interconnects.

  Weaknesses

  The report only discusses demand and architectural trends, and does not cover NVIDIA's earnings forecast.

  Comparison

  Compared with other CSPs, NVIDIA has a standout share in 1.6T demand.

  Risks

  Supply-chain bottlenecks, changes in network architecture, and customer deployment pace.

• META PLATFORMS INC (META.US)

  A major source of 800G optical transceiver demand, with 2026E demand of about 14 million units.

  Strengths

  AI infrastructure investment drives demand for 800G optical modules.

  Weaknesses

  The report does not specify Meta's purchasing pace, supplier allocation, or cost impact.

  Comparison

  Its 800G demand estimate is higher than the single-company estimates for AWS, NVIDIA, Google, Oracle, and Microsoft.

  Risks

  Changes in capex pace, supply shortages, and optical module price volatility.

• ORACLE CORP (ORCL.US)

  A demand source for both 800G and OCS, with 2026E 800G demand of about 7 million units and OCS demand of about 2,000 units.

  Strengths

  Expansion of cloud infrastructure drives demand for high-speed optical interconnects.

  Weaknesses

  OCS demand scale is still clearly below Google's.

  Comparison

  Its 800G demand is close to AWS, but OCS adoption is smaller than Google's.

  Risks

  Cloud capex pace, technology roadmap selection, and supply-chain delivery.

• XPO

  A new high-density pluggable optical solution; 12.8T XPO is composed of eight 1.6T optical transceivers.

  Strengths

  Offers a high-density optical interconnect concept, suitable for in-rack use cases.

  Weaknesses

  High power consumption and requires liquid cooling; experts believe CSPs are more inclined toward CPO and NPO rather than XPO.

  Comparison

  Compared with traditional pluggable optical modules, XPO is more for in-rack use; compared with CPO/NPO, CSP appetite may be weaker.

  Risks

  Heat dissipation, power consumption, CSP technology preference, and commercial adoption uncertainty.

Key data

• 2026E global 800G optical transceiver demand45-50 million unitsExpert estimate; actual shipments may be about 45 million units.
• 2026E global 1.6T optical transceiver demandMore than 25 million unitsExpert estimate; actual shipments may be about 15 million units, constrained by shortages of key components.
• 2027E global 800G optical transceiver demand60-70 million unitsExpert estimate; actual shipments about 55-60 million units.
• 2027E global 1.6T optical transceiver demandMore than 40 million unitsExpert estimate; actual shipments about 30 million units.
• 2026E NVIDIA 1.6T demandAbout 15 million unitsOne of the main sources of 1.6T demand.
• 2026E Google 1.6T demandAbout 10 million unitsOne of the main sources of 1.6T demand.
• 2026E Meta 800G demandAbout 14 million unitsOne of the main sources of 800G demand.
• 2026E Oracle 800G demandAbout 7 million unitsExpert estimate.
• 2026E Google OCS demandAbout 18,000 unitsAbout 12,000 units are developed in-house, with the remainder outsourced to Coherent and Lumentum.
• 2027E total OCS demandAbout 40,000 unitsGoogle is expected to account for about 30,000 units.
• 800G DR EML priceAbout USD380The 2026 price is expected to decline about 10% year over year, and may fall another about 10% in 2027E.
• 1.6T DR SiPh priceUSD1,000-1,1002026E expert estimate.
• 1.6T DR EML priceUSD1,100-1,2002026E expert estimate.
• 1.6T FR priceAbout USD1,3002026E expert estimate.
• 100G EML priceRose from USD5 to about USD7The expert said the price may continue to rise.
• 200G EML priceAbout USD20-25Current price range.

Impact & implications

For investment research, the implication is that the AI optical interconnect chain still has a strong demand foundation, especially in 1.6T, OCS, and high-bandwidth data-center interconnects; however, near-term revenue realization depends not only on CSP capex, but also on component supply, yield improvements, and price declines. Coherent and Lumentum may benefit from Google's outsourced OCS demand, while the network architecture choices of large CSPs and AI platforms such as NVIDIA, Google, Meta, Oracle, and others will influence the competitive landscape for optical transceivers and the OCS, CPO, and NPO routes.

Risks

• Shortages of key components such as EML chips, isolators, and filters may limit actual shipments.
• Continued price declines in 800G and 1.6T optical transceivers may compress supply-chain margins.
• The magnitude of 1.6T price declines may exceed 10% because of yield improvements, putting pressure on unit revenue.
• Due to high power consumption and liquid-cooling requirements, XPO may struggle to become a mainstream CSP choice.
• OCS demand currently depends heavily on Google, with high customer concentration and a high in-house development ratio.
• The report reflects expert views and industry tracking and does not constitute a formal rating or verifiable order data.

What to watch

• Whether actual 2026E 800G/1.6T shipments approach 45 million / 15 million units.
• Whether shortages of EML chips, isolators, and filters ease.
• The ratio of Google's in-house OCS development versus outsourcing, and the order progress actually won by Coherent and Lumentum.
• How OCS and CPO are adopted in NVIDIA's next-generation dragonfly architecture.
• The size of price declines and the pace of yield improvement for 800G and 1.6T in 2027E.
• CSP technology roadmap choices among XPO, CPO, NPO, and traditional pluggable optical modules.