The Machine Around the Chip
Richardson Dackam@richardsondx
−16.0%
since Oct 1
The idea
I think AI's next bottleneck isn't the chip itself but everything around it: moving data, delivering power, pulling out heat. So this basket leans into the layers beneath the visible optical module, lasers, substrates, drivers, photonics foundries, plus dedicated buckets for power delivery and liquid cooling, since density forces both no matter which optical architecture wins. I tilt toward pre-inflection names where qualification is turning into early production, keeping established optics shippers smaller as confirmation rather than the core bet.
What it owns
- The lasers, substrates, driver chips and foundries that optical modules depend on are shifting from commodity to strategic as data movement scales. · MACOM Technology SolutionsIt makes the driver and receiver chips that translate electrical signals for lasers, components becoming harder to source as optical speeds rise., Tower SemiconductorIt manufactures silicon photonics chips for customers, the foundry layer where designs move from prototype to production volume., AXT Inc.It supplies the indium phosphide wafers used to grow lasers, positioned to convert tightening substrate demand into orders as laser volumes ramp., POET TechnologiesIt makes optical interposers that package light and electronics together, positioned as a design wins at the pre-production stage convert toward actual orders., Lightwave LogicIt develops polymer modulators promising faster switching at lower power than today's materials, a moonshot in the photonics stack with payoff if the architecture favors it.22%
- The companies rerouting signals and repackaging the electrical path are stepping in as the distance between switch and optics shrinks and becomes a design constraint. · Credo TechnologyIt makes active copper cables and retimers for short rack links where copper still beats optics on cost, multiplying as cluster sizes grow., Astera LabsIt makes the connectivity chips that let huge processor clusters coordinate, sitting at the layer where the bottleneck moves as chips outrun the infrastructure around them., Amkor TechnologyIt does advanced packaging that combines chips, memory and eventually optics into single assemblies, the physical layer where systems replace chips as the constraint.15%
- Whoever advances the photonics race still needs suppliers to grow crystals, inspect packages and test light, and these companies sell the equipment to do it. · Veeco InstrumentsIt sells the epitaxy machines that grow laser layers on wafers, standing first in line if laser production needs to scale with photonics adoption., FormFactorIt makes the probes needed to test photonic chips before packaging, critical as co-packaged optics move from pilot lines to production volume., CamtekIt supplies inspection tools for advanced packages, becoming more necessary as more value concentrates in the package and defect detection matters more.14%
- Chip density has outpaced air cooling, making liquid cooling mandatory in new AI data centers as thermal constraints reshape the infrastructure. · Vertiv HoldingsIt sells the power and cooling systems data centers buy across any chip or optical architecture, tracking thermal and power orders as compute density rises., Modine ManufacturingIt builds the liquid cooling systems for data centers as racks exceed what air cooling can handle and thermal constraints become unavoidable., nVent ElectricIt supplies the rack enclosures, liquid cooling hardware and power connections every dense cluster needs, becoming unavoidable as rack density rises.14%
- Companies already selling optical parts into the buildout demonstrate the demand is real and provide steadier ballast against technology risk. · Coherent Corp.It ships the optical transceivers and indium phosphide lasers hyperscalers already buy in volume, serving as clearest evidence that data movement is the pressure point., FabrinetIt builds the optical modules for nearly all customers, so its revenue directly tracks whether light is moving deeper into the machine., Lumentum HoldingsIt supplies the lasers and photonic components inside data center modules, an established shipper confirming the optical buildout is happening.13%
- Megawatt-scale data center power demands are forcing a redesign of how electricity reaches chips, following the same commodity-to-strategic pattern one layer over. · Monolithic Power SystemsIt delivers power directly at the GPU, becoming a design constraint as chips draw more current regardless of which optical approach wins., Vicor CorporationIt makes dense power modules designed for the exact problem of delivering huge current into small spaces next to hot chips., Navitas SemiconductorIt makes gallium nitride chips designed for the next generation of data center power delivery systems, a transition still in early deployment stages.13%
- Cash10%