According to a research report released by Orient Securities Company Limited (ASX: 600958), OCS will become a universal optical interconnection infrastructure in AI computing clusters. The expansion of customer numbers and application scenarios is expected to open a new round of growth space, and the market may exceed expectations. The OCS industry is undergoing significant changes, and Orient Securities Company Limited is bullish on the entry of major players such as NVIDIA and OpenAI, which could bring a substantial boost to industry prosperity.
The main views of Orient Securities Company Limited are as follows: Moving from fixed connections to dynamic reconfiguration, resource pooling and fault recovery are driving OCS penetration. AI cluster networks are evolving from simply pursuing connection bandwidth to balancing computing power utilization, flexible scheduling, and reliability. The demand for reconfigurable cluster elasticity is expected to become the core factor driving OCS penetration. Traditional fixed physical topology networks struggle to flexibly adjust connection relationships based on computing tasks, resource allocation, and fault conditions, which easily leads to fragmentation of computing resources and idle local resources. In contrast, OCS dynamically configures physical optical paths, retaining electrical packet switching capabilities while enabling network topology reconstruction and flexible networking of computing resources, thereby significantly improving overall cluster utilization and optimizing TCO. By empowering AI computing networks with on-demand reconfiguration, OCS is expected to move from specific application scenarios to broader application scenarios and platforms.
OCS is expanding from Google TPU to GPU Scale-up, accelerating market space expansion. In the past, OCS was mainly used in Google TPU interconnects and Jupiter data center networks, with relatively concentrated market demand. As manufacturers such as NVIDIA push GPU Scale-up from single racks to multi-rack deployments, cross-rack interconnect bandwidth and optical connection scale continue to increase, potentially creating new incremental markets for OCS. According to Cignal AI forecasts, the global OCS market size is expected to exceed $8 billion by 2030, with a compound growth rate exceeding 40% from 2025 to 2030, of which GPU Scale-up is expected to contribute significant increments starting in 2028. OCS is expanding from Google-dominated application systems to broader GPU computing networks. The expansion of customer numbers and application scenarios is expected to open a new round of growth space, making OCS a universal optical interconnection infrastructure in AI computing clusters.
Multiple technology routes are evolving in parallel, and complete systems and core optical components are expected to benefit first. Currently, OCS technology routes show diversified development trends, with MEMS, liquid crystal, piezoelectric, and optical waveguide technologies each having their own advantages. Among them, MEMS occupies an important position in current large-scale applications due to its large port expansion capability and industrialization foundation; optical waveguides, with high integration, potential for scale manufacturing, and rapid reconfiguration capabilities, have development potential in small and medium port, high-density scenarios, but still need continuous improvement in insertion loss, port expansion, and manufacturing yield. As OCS demand is released, links in the industry chain such as complete systems, MEMS micromirrors, collimator arrays, photonic chips, and FAUs are expected to benefit. The bank believes that enterprises with core process barriers, system integration capabilities, and large-scale delivery capabilities are expected to be the first to achieve performance realization.
Risk warnings: OCS port ratio decline leading to demand falling short of expectations, delays in GPU Scale-up adoption of OCS, technology route and competitive landscape risks, and AI capital expenditure falling short of expectations.
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