Applied Optoelectronics Inc. (AOI) will build two adjacent buildings in Pearland, Texas, increasing its Houston-area manufacturing capacity by about 388,000 square feet.

The move brings AOI’s total footprint in the region to roughly 900,000 square feet when combined with existing and planned facilities. That growth is tied to surging demand for high-speed optical components used in AI data centers.

AOI already operates about 135,000 square feet near its Sugar Land, Texas, headquarters and is developing a new 210,000-square-foot manufacturing facility nearby. The company also recently leased a 154,000-square-foot building at Blue Ridge Commerce Center.

The company said the goal is to scale production of high-speed optical transceivers, which are critical for moving large volumes of data between servers inside data centers. These components are essential for supporting AI workloads, which require faster and more bandwidth-intensive networking.

AOI CEO Thompson Lin said in a release that “the demand for optical connectivity in data centers has exceeded our expectations,” adding that the company is expanding capacity across manufacturing, supply chain, and support functions to keep pace.

As part of the expansion, AOI expects to be able to produce up to 700,000 units per month of next-generation 800 Gb/s (800G) and 1.6 Tb/s (1.6T) optical transceivers in the Houston area. These higher-speed modules are designed for the latest generation of AI infrastructure, where data throughput requirements continue to increase.

The company also plans to expand its laser fabrication capacity – a key part of optical component manufacturing – by about 350% by the end of 2027.

AOI executives framed the expansion as part of a broader strategy to scale U.S.-based production. CFO Stefan Murry said the move aligns with capacity targets the company previously outlined and is intended to support “the next wave of AI infrastructure deployments.”