Data Movement Bottleneck
Felipe de Antuñano@fdeantunano
−17.7%
since Oct 9
The idea
I believe AI data centers are bottlenecked by moving data, not computing it, whether between chips, racks, or whole facilities. So this take owns the companies fixing that: laser and wafer makers riding today's indium phosphide shortage, plus the chipmakers behind co-packaged optics that I think replace copper inside racks by 2027-28. Fiber, connectors, switching, and inter-data-center links spread the bet across layers instead of leaning on one product cycle, and I keep a small cash reserve to add when these volatile names drop.
What it owns
- Glass fiber cables, connectors and assembled optical modules are needed for every new optical link, whether inside racks or between data centers. · CorningMakes the glass fiber cables that carry light across both short distances inside racks and long distances between data centers., AmphenolManufactures connectors and cables for both copper and fiber connections, generating revenue regardless of which technology dominates inside data centers., FabrinetAssembles optical modules for major optics suppliers, hitting factory capacity limits before others when demand accelerates., Credo TechnologySells active electrical cables and signal processing chips that extend how far copper can reach inside a rack before optical connections take over., Astera LabsMakes connectivity chips that link GPUs, processors and memory inside servers and racks at the point where data flow becomes densest.25%
- Optical connections integrated directly onto processor chips reduce the distance light travels and cut power loss, making this the next step in data center architecture as AI clusters scale. · BroadcomMakes the Ethernet switch chips at the core of scale-out networks and is moving toward co-packaged optics where lasers sit next to the processor., Marvell TechnologySells the digital signal processing chips inside optical transceivers and is building silicon photonics for optical connections, gaining as more data moves through light., NVIDIAControls NVLink, the connection standard between GPUs inside a server, and designs its own networking hardware, giving it influence over when scale-up transitions to optics., Tower SemiconductorA contract chip factory that manufactures silicon photonics chips for optical transceiver makers, earning revenue from the entire optical ecosystem.23%
- The indium phosphide lasers that convert electrical signals to light for fiber connections are the constrained part of today's optical buildout, giving suppliers pricing power. · Coherent CorpManufactures indium phosphide lasers and the optical engines built around them, benefiting from both today's laser supply constraints and tomorrow's co-packaged optics transition., Lumentum HoldingsProduces the indium phosphide lasers that convert electrical signals into light, a critical bottleneck in the current optical buildout for AI data centers., AXT IncProduces the indium phosphide wafers on which lasers are grown, sitting one step upstream of the current laser supply constraint., Applied OptoelectronicsBuilds its own lasers inside the optical transceivers it sells to data centers, benefiting directly from tight laser supply.23%
- Ethernet switches that connect GPU racks within a single data center grow as AI clusters expand and new training workloads demand more internal bandwidth. · Arista NetworksManufactures Ethernet switches that connect GPU racks within AI clusters, the main switching standard for hyperscaler internal networks., CelesticaBuilds customized switches and racks that hyperscalers design for their own use, scaling up as networking spending grows.11%
- Training and serving large AI models across multiple buildings requires long-distance optical connections to stitch separate data centers into a single computing fabric. · CienaSells optical networking gear that links entire data centers to each other, allowing AI workloads to spread across multiple sites., NokiaAcquired Infinera's optical networking business, which includes in-house lasers and gear for linking data centers to each other.10%
- Cash8%