How Micro LED Becomes the “New Vessel” for AI Computing Power: The “Cross-Industry” Move of Panel Manufacturers into Optical Communications
Hello everyone, I’m your financial journalist. Recently, there’s been a rather interesting phenomenon in the tech world: companies that used to produce screens (panels) and light-emitting diodes (LEDs) for TVs and phones have suddenly shifted their focus to researching how to transmit data for AI servers.
Behind this is a revolution in “optical communications” triggered by the explosive growth of AI computing power. Today, we’ll break down this news in simple terms to understand what this opportunity entails and what challenges lie ahead.
Summary of the Core Points
In short, AI consumes a lot of power and generates a lot of heat, so traditional copper wire for data transmission is no longer sufficient; we need to switch to light.
Micro LEDs, which were initially seen as the next generation of display technology (for example, for clearer screens), haven’t become popular due to their complex and expensive manufacturing processes. However, AI data centers require extremely fast and low-power data transmission, and Micro LEDs fit the bill perfectly with their small light-emitting areas, low power consumption, and high data transmission bandwidth. They are thus considered a promising alternative to traditional copper cables or existing lasers.
Currently, leading domestic companies such as BOE, Sanan Optoelectronics, and Megachip are taking the lead in this field, but they are still in the laboratory and sample validation stages, far from making substantial profits. The industry predicts that mass production won’t begin until the second half of 2028, with the market expected to reach $848 million by 2030.
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A Detailed Explanation of Micro LED Optical Interconnection from Five Perspectives
1. Why Does AI Need Micro LEDs? – Copper Wires Are No Longer Enough
Imagine an AI server as a supercomputer that processes massive amounts of data. Traditionally, data was transmitted within the server using copper wires. However, as AI models have grown larger and data volumes have increased exponentially, copper wires have faced two major issues:
- High Heat Generation: Electricity passing through copper wires generates heat, and the combination of the server’s own heat generation and the additional heat from the wires creates significant cooling challenges.
- Speed Limitations: Copper wires lose signal strength quickly when transmitting high-speed signals, making communication less reliable over longer distances or at higher speeds.
In this context, light becomes a better option. It transmits data faster, generates less heat, and suffers less interference. Although traditional lasers are effective, they are costly and power-consuming. Micro LEDs, with their tiny size (on the micron level), extremely low power consumption (about 5% of that of traditional copper cables), and high data bandwidth, are an ideal solution for AI data centers, where every watt of power counts and electricity costs are high.
2. Why Have Panel and LED Manufacturers Suddenly Changed Their Focus? – The Old Racecourse Is Too Competitive, the New One Holds Promise
You might wonder: These companies were in the business of making TV screens and streetlights; how did they suddenly become experts in optical communications?
- The Old Path Is Dead-Ended: Micro LEDs, as a display technology (for ultra-high-definition screens), have struggled to gain widespread adoption due to the technical difficulty of precisely arranging millions of tiny LEDs on a screen, resulting in low yields and high costs. In contrast, Mini LEDs and OLEDs have evolved rapidly and captured the market.
- New Opportunities: The surge in AI infrastructure has opened new possibilities for these companies. While the screen market is competitive, the technology for manufacturing light-emitting chips is transferable. Since the screen market is saturated, they are looking for new applications—instead of displaying images for humans, they can use LEDs to transmit data for machines.
- Leveraging Existing Expertise: Companies like BOE, Sanan Optoelectronics, and Megachip have expertise in LED chip manufacturing. By overcoming challenges in high-speed modulation and packaging, they can enter the massive AI market. It’s more profitable to focus on this emerging field than to continue competing in the display industry.
3. How Far Have We Come? – Still in the Initial Stages
The news mentions that many companies have established joint laboratories and are conducting sample validation tests. This indicates that we are still in the early research and testing phase, far from mass production.
- Collaboration: This technology spans multiple disciplines (optics, electronics, materials, communications), so no single company can develop it on its own. Therefore, they are collaborating with universities (such as Tsinghua, Nanjing University, Hunan Normal University) and operators (like China Mobile) to overcome challenges. For example, Sanan Optoelectronics is working with Tsinghua University, and BOE Huacan is collaborating with Nanjing University to tackle the issue of bandwidth.
- Key Metrics: The main focus is on modulation bandwidth (the maximum speed at which data can be transmitted). Sanan Optoelectronics has achieved over 7GHz, while BOE Huacan has reached 3GHz. These numbers may sound technical, but in simple terms, they are testing how fast the optical transmission system can work.
- Current Status: The samples are being sent to customers (such as server manufacturers) for testing to determine their suitability and stability. Mass production and profit generation are still a long way off.
4. What Are the Biggest Barriers? – Technical and Industrialization Challenges
Despite the promising prospects, Micro LED optical interconnection faces several challenges:
- Insufficient Bandwidth: While better than copper wires, Micro LEDs still need to improve their transmission speed to meet the demands of top-tier AI applications.
- Reliability and Precision: Optical transmission requires high precision; any slight misalignment can result in signal loss. The lifespan and stability of Micro LEDs under high-speed conditions also need to be verified.
- Integration Challenges: Integrating Micro LEDs, photodetectors, optical fibers, and control chips into a single package (CPO) is complex, and reducing additional power consumption and latency caused by multiple chips is a significant engineering challenge.
- Costs: Although Micro LEDs are power-efficient, their current manufacturing processes are costly. Only when yields increase and production scales up can costs decrease, making them commercially viable.
5. Future Timeline: When Will Profits Be Realized? – 2028 Is a Critical Year
According to TrendForce Research, the timeline looks like this:
- 2026: The technology will be finalized. Companies like Megachip plan to establish chip standards and complete basic integration from chips to modules.
- 2027: Modules will be sampled and tested, with the ability to integrate multiple channels.
- Second Half of 2028: This is the critical turning point for mass production, with Micro LED CPO (Co-Packaged Optoelectronics) modules starting to be shipped in large quantities.
- 2030: The market will mature, with shipments expected to reach 5.3 million units and a market value of $848 million. The penetration of CPO technology in AI data center optical communications is expected to reach 35%.
Implications for the General Public:
If you’re interested in investing, now is not the time to buy in, as the financial benefits won’t be evident until 2028. However, if you’re following tech trends, this is an area worth watching in the long term. It represents the cross-industry integration of display technology with communication technology and is a promising segment of AI infrastructure. In the future, the Micro LED chips produced by these panel manufacturers could be quietly powering your AI servers, transmitting massive amounts of data with minimal power consumption.