Nvidia demands a 20x increase in indium phosphide laser capacity by 2030 to address AI networking bottlenecks, suppliers propose 12x.
Nvidia has requested suppliers ramp up indium phosphide (inP) laser capacity 20 times by 2030 to support AI cluster networking, citing potential bottlenecks. Suppliers countered with a proposed 12x increase, as demand for optical networking surges to enable faster data transfer between GPUs in AI data centers.
The inP optics market is projected to grow from $1.9 billion in 2025 to $22.75 billion by 2030. Key suppliers like Lumentum, Coherent, and Broadcom could reach capacities of $9.0 billion, $4.3 billion, and $4.5 billion, respectively, with Rosenblatt Securities favoring Coherent and Lumentum for efficiency gains and market share expansion.
AI deployment faces repeated shortages, from GPUs to power infrastructure, with optics emerging as the latest critical constraint. Hyperscalers investing heavily in AI data centers require advanced optical networking to handle exponential growth in cluster sizes and data transfer demands.