The exponential expansion of AI computing power, against a backdrop of increasingly prominent power and land constraints at individual data centers in North America, is driving a shift in computing resource deployment from within-campus Scale Up/Out to cross-campus, cross-regional Scale Across. Scale Across, as a core direction for breaking through the computing power wall of data centers, is accelerating its transition from early validation to large-scale deployment and is poised to become a new high-growth segment in the optical interconnect domain of the AI era. It is believed that the DCI (Data Center Interconnect) industry chain is undergoing a profound restructuring: the stringent demands of the AI era for DCI, including high density, high bandwidth, low latency, and high reliability, are fueling explosive demand for high-speed coherent optical modules and high-density optical amplifiers. Industry value is rapidly shifting away from its traditional concentration in downstream system vendors towards mid- and upstream segments like optical modules, optical amplifiers, and core optoelectronic chips. Domestic manufacturers, leveraging mature manufacturing advantages and supply chain synergy, are expected to participate deeply in the global DCI supply chain.
Energy Constraints Drive Data Centers Towards Decentralization, Scale Across Emerges as Key Solution
According to data disclosed by companies like Google at OFC 2026, AI model parameters are growing at an approximate annual rate of tenfold, with training compute power already exceeding 10²⁶ FLOPs. Single data centers housing millions of GPUs have power demands reaching the gigawatt (GW) level, far exceeding the actual supply capacity of North American power grids. The persistent mismatch between exploding compute demand and energy limits is forcing the industry into a chain reaction: compute explosion → energy limits → distributed strategy. Scale Across breaks through the physical carrying capacity boundaries of single data centers by enabling efficient GPU cluster interconnection across campuses and regions. Targeting tightly-coupled AI training scenarios, its requirements for latency, bandwidth, jitter, and packet loss are significantly higher than those of traditional DCI. Cisco data indicates Scale Across bandwidth demand is already 14 times that of traditional solutions. As gigawatt-scale AI factories accelerate deployment, distributed interconnect is transitioning from exploration to large-scale deployment, becoming a key path to breaking the data center compute power wall.
Scale Across Reshapes DCI Supply Chain, Open Architecture and Multi-Rail Drive Mid- and Upstream Volume
Traditional DCI relies on closed DWDM/OTN systems, with value highly concentrated in equipment vendors. In contrast, Scale Across is shifting towards an IPoDWDM model, which combines DWDM with high-speed coherent optical modules and emphasizes Open Line Systems (OLS), driving cloud vendors to directly procure coherent optical modules and line cards. The evolution of Multi-Rail technology is accelerating. According to statements on Ciena's official website, this technology is set to increase the number of fiber pairs per rack by 32 times, further boosting demand for high-speed coherent optical modules and high-density optical amplifiers. Concurrently, Coherent-Lite, with its simplified DSP and fixed-wavelength approach, fills the technological gap for high-density, medium-to-short-distance interconnects, showing strong application potential within data centers and for campus-level interconnection. The robust demand for midstream products is further exacerbating supply bottlenecks for upstream core components, with tight supply conditions for pump lasers and narrow-linewidth lasers persisting, leading to continued upward pressure on their value under a duopoly market structure.
Scale Across Demand Accelerates, Domestic Manufacturers Deeply Benefit from Industry Restructuring
The latest financial reports from the three leading system vendors show strong growth in Scale Across-related orders and guidance, simultaneously validating robust end-demand from cloud vendors. Some upstream component manufacturers have also noted in recent earnings calls that demand for Scale Across is exceeding expectations with high visibility, and they are actively securing orders through long-term agreements to drive capacity expansion for pump lasers and narrow-linewidth lasers. The participation of domestic manufacturers in the DCI supply chain is concentrated in the mid- and upstream segments, shipping products primarily as ODM/OEM or under their own brands. These products mainly consist of coherent optical modules, EDFA optical amplifiers, and line cards. According to LightCounting forecasts, the Scale Across market is expected to achieve a compound annual growth rate of 108.5% from 2024 to 2030, with demand for high-speed coherent optical modules and optical amplifiers rising rapidly. Domestic manufacturers are poised to fully benefit from the incremental DCI market opportunity.
Key Considerations and Investment Outlook
Potential risk factors include: AI computing power demand falling short of expectations, cloud vendor capital expenditure being lower than anticipated, slower-than-expected capacity ramp-up, technological iteration risks, intensifying industry competition, and geopolitical risks. As AI training scales continue to expand, power and land constraints are pushing Scale Beyond from early validation towards accelerated large-scale deployment. In the field of AI optical communications, it not only has a clear implementation path but also demonstrates long-term expansion potential and value in supply chain restructuring. The DCI market, compared to data center optical modules, places higher demands on the technical capabilities and customer acquisition of midstream optical module vendors. The market is still on the cusp of volume ramp-up, offering broad performance potential. It is advisable to prioritize companies already deeply involved in the global DCI supply chain with mass-production capabilities for coherent optical modules and optical amplifiers, as well as those with potential for import substitution in upstream core components like narrow-linewidth lasers and pump lasers, to capture the historic configuration opportunity in optical communication infrastructure for the era of distributed AI computing.
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