Global Tech Optical Networking The next mega trend in AI infrastructure

EQUITY RESEARCH | April 17, 2026 | 2:11AM HKT

The next mega trend in AI infrastructure Networking unlocks computing capability for single AI chips, connecting multiple chips (working together), enabling seamless data exchange and low latency, and driving AI to the next level. Along with an AI infrastructure ramp-up and rising computing power per rack, we expect all configurations to enjoy strong growth ahead, opening a further 9x TAM unlock to US$154bn. Specifically, we discover: (1) 16x / 45x dollar content increase in scale out / scale up, (2) 13x larger TAM for optics expanding from scale out to scale up, (3) 10x larger value market for pluggable optical modules in scale out from 2H25 AI server model to 2H27 AI server model. In this report, we analyze: (1) dollar content across different configurations, (2) Scale-out and Scale-up market opportunities, (3) Component contributions across copper cables, pluggable optical modules, CPO, and PCB midplanes, and (4) EPS upside across the supply chain. We remain bullish on our Optical and PCB coverage, including Buy rated: Innolight, Eoptolink, TFC Optical, Landmark, VPEC, Sumitomo, Mitsubishi, Furukawa, Victory Giant (on CL), WUS, EMC and Shengyi. We expect these companies to see strong growth into 2028E on AI servers ramp up, specification upgrade, and usage expansion. Allen Chang Verena Jeng James Schneider Mark Delaney Ryo Harada Goldman Sachs (Asia) L.L.C. Goldman Sachs (Asia) L.L.C. Goldman Sachs & Co. LLC Goldman Sachs & Co. LLC Goldman Sachs Japan Co., Ltd.

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(1) Blackwell network in details 4

(2) Rubin network in details 5

(3) Rubin Ultra network in details 6

(4) Optical networking supply chain 7

(5) Scale up / Scale out TAM and EPS implications 8

(6) Choice of connection: PCB vs. Copper vs. Optics 13

(7) Optics: speed upgrade continues 15

(8) CPO with Switch kick off in 2026 16

(9) Pluggable optical modules: SiPh-based in expansion 18

(10) Light sourcing: Supply chain and Shortage 20

(11) Manufacturing: how to make SiPh optical modules and engines in CPO 22

(12) Attach rate: Pluggable optical modules to GPU / ASIC in scale out 23

(13) Optical Circuit Switch: Achieving all optics networking 24

(14) Technology adoption: pace varies on infrastructure 26

Appendix: Prysmian (PRY.MI, Buy): Largest global cable maker 26

Appendix: Scale up vs. Scale out vs. Scale across 27

Appendix: Closed vs. Open ecosystems 27

Appendix: Illustration of different connection products 28