Applied Optoelectronics, Inc.

What AOI Does

Vertically integrated provider of fiber-optic networking products for four end markets: internet data center, CATV, telecom, and FTTH.
Product range includes lasers and laser components, components and subassemblies, modules, and complete turn-key equipment.
Designs and manufactures its own lasers (using both MBE and MOCVD), light engines, optical components, subassemblies, modules, and some equipment.
In 2023 began selling many CATV products directly to MSOs under the Quantum Bandwidth brand; this direct-to-MSO channel complements traditional CATV design and manufacturing for equipment vendors.
Emphasizes in-house manufacturing (Sugar Land, TX; Taiwan; China) to shorten time-to-market, improve quality, and support scalable production, with a growing focus on U.S. production for data center products.

Internet Data Center (fastest-growing): sells optical transceivers and, in many cases, light engines (lasers plus subassemblies) to hyperscale operators and data-center equipment suppliers. Benefits from in-house laser technology and automated production for rapid scaling.
CATV: offers a broad range of lasers, transmitters, transceivers, and turn-key equipment; additional revenue from CATV outdoor equipment and amplifiers. From 2023 onward, expanding direct sales to MSOs via Quantum Bandwidth.
Telecom: supplies lasers, laser subassemblies, and transceivers for high-speed fiber networks, including 5G backhaul and metro-scale deployments.
FTTH: provides products and solutions for PON, including WDM-PON and emerging higher-speed PON variants (e.g., XGS-PON, 25 Gbps, 50 Gbps PON concepts).

Proprietary laser fabrication: uses a combination of MBE and MOCVD, using the advantages of both methods to produce laser chips with longer life, higher efficiency, and favorable temperature/humidity tolerance.
Laser enhancement technology: circuitry to correct chirp and wavelength drift to improve signal fidelity over longer fiber links.
Optical hybrid integration: miniaturized packaging and co-packaging to reduce size, power, and cost; enables multi-laser light engines and hybrid WDM-PON solutions.
Mixed-signal design: capabilities in both analog and digital signaling to address evolving CATV networks (e.g., digital return-path, Remote-PHY).

Facilities: Sugar Land, Texas; Ningbo, China; Taipei, Taiwan; R&D in Duluth, Georgia.
Manufacturing scope:
- Sugar Land: laser chips (MBE/MOCVD), subassemblies, components; laser chips manufactured here.
- Taiwan: butterfly lasers, transceivers, CATV outdoor equipment (amplifiers); components produced here and in Sugar Land.
- China: labor-intensive components and CATV transmitters, internet data center equipment, CATV outdoor equipment.
Quality and environmental: all facilities ISO 9001:2015 and ISO 14001:2015 certified.
Intellectual property (as of 12/31/2025): 199 U.S. issued patents, 140 patents issued in China and Taiwan, 10 patents issued in Europe; patents expire 2026–2046. Portfolio covers laser structure/design, laser fabrication, photodiodes, optical devices, packaging, and CATV technologies.
Intellectual property protection: combination of patents, trade secrets, confidentiality agreements, and other protections.

Revenue:
- 2025: $455.7 million
- 2024: $249.4 million
- 2023: $217.6 million
Gross margin:
- 2025: 30.0%
- 2024: 24.8%
- 2023: 27.1%
Net income (loss):
- 2025: $(38.2) million
- 2024: $(186.7) million
- 2023: $(56.0) million
Accumulated deficits:
- 12/31/2025: $(493.1) million
- 12/31/2024: $(451.9) million
Revenue mix by market:
- 2025: CATV 53.8%, Internet Data Center 42.9%, Telecom 3.0%, Other 0.3%
- 2024: CATV 35.2%, Internet Data Center 59.5%, Telecom 4.4%, Other 0.9%
Major customers and concentration:
- 2025 largest CATV customer: Digicomm
- 2025 largest Internet Data Center customer: Microsoft
- Customer concentration (percent of revenue):
  - Microsoft: 28.8% (2025); 43.7% (2024); 46.6% (2023)
  - Oracle: 12.4% (2024)
  - Digicomm: 53.1% (2025); 34.1% (2024); 11.3% (2023)
  - ATX Networks: 15.6% (2023)

Direct vs. indirect:
- 2025: direct sales 44.7% of revenue; remainder through indirect channels
- 2024: direct 64.4%
- 2023: direct 88.6%
Uses a mix of direct and ODM/indirect channels, with ongoing efforts to diversify the customer base and expand ODM relationships.

Materials and sourcing: relies on a limited number of suppliers for raw materials and components; actively reviews supplier relationships to mitigate risk, manage costs, and maintain supply continuity.
Conflict minerals: subject to SEC conflict minerals rules under Dodd-Frank, which add compliance costs and supply-chain verification requirements.
Backlog: short-term purchase orders and lack of deposits mean backlog is not a reliable indicator of future revenue; orders can be rescheduled or canceled with little notice.

Strategy: expand in the data center market (open-system architectures), invest in U.S. data center production capacity, extend CATV leadership (including direct-to-MSO sales via Quantum Bandwidth), invest in automated production and new products, selectively pursue adjacent opportunities (e.g., outdoor equipment for telecom, industrial, aerospace, oil & gas), and pursue acquisitions and strategic alliances.
Competitive strengths: proprietary MBE/MOCVD laser fabrication, light-engine design and manufacturing, mixed-signal and RF/electronic design capabilities, high level of vertical integration, extensive automation, domestic (U.S.) production capabilities, and a diversified geographic footprint.

Positions growth on demand for higher-bandwidth interconnects, AI-driven data center expansion, and CATV upgrades (DOCSIS 4.0 adoption).
Positions U.S. manufacturing as a competitive advantage amid supply-chain considerations and geopolitical factors.