(Yicai) Sept. 17 -- Driven by surging demand for optical communications in the buildout of artificial intelligence data centers, Chinese suppliers of light-emitting diodes and display panels are accelerating efforts to apply micro LED chips to optical interconnects, though most projects remain at the stage of setting up joint laboratories, supplying samples, or undergoing customer validation.

Shipments of micro LED co-packed optics optical transceiver modules could begin scaling rapidly as early as the the second half of 2028, Wu Yingjie, an analyst at market research firm TrendForce, told Yicai. Production is expected to reach 5.3 million units by 2030, with the market reaching USD848 million in value, Wu said.

Once seen as a leading candidate for next-generation displays, micro LEDs failed to gain an upper hand against mini LEDs, organic LEDs, and other competing technologies. Though their use in high-end large-format screens and augmented reality micro-displays has remained limited, during demand for optical-communications in AI data centers has opened a new window of opportunity.

Thanks to low power consumption, high data density, and low bit error rate, micro LEDs are emerging as a potentially important light source for next-generation short-reach optical interconnects, according to a TrendForce report.

Micro LEDs could become one of the three major solutions for short-reach, high-speed transmission inside AI server racks in vertically scaled data center networks, the report said. The other two approaches identified by TrendForce are active electrical cables and VCSEL-based near-packaged optics.

Leading Chinese panel maker BOE Technology Group and LED chip giants such as Sanan Optoelectronics, MTC Co, and Changelight recently unveiled their progress in researching and developing micro LEDs.

Sanan’s semiannual financial report said the Xiamen-based firm is working with domestic and overseas clients and has conducted several rounds of validation to advance Micro LED chips for optical-interconnect applications. Its micro LED CPO optical interconnect solution for data centers consumes only 5 percent of the power used by traditional copper cables.

Businesses in the Micro LED optical-interconnect chain are working to increase bandwidth, Wu said. At the same time, supply chain alliances spanning Micro LED chips, photodiodes, optical fiber, optical components, and optical-communications modules are gradually taking shape, he added.

Editors: Tang Shihua, Futura Costaglione