Applied Optoelectronics Inc. (AOI) is investing $150 million over the next several years at a facility near Houston to onshore production of optical transceivers to feed AI-fueled domestic data center expansion.

AOI said it recently added a new manufacturing line at its headquarters in Sugar Land, Texas. That facility is being used to support the production of 800 Gb/s (800G) transceivers, with the goal of that facility accounting for 40% of its expected global production of more than 100,000 transceivers by year-end.

AOI is also planning a new 210,000-square foot facility at that location scheduled to be online by mid-2026. That new facility will initially support expanded 800G transceiver production with an eventual goal of producing 1.6 Tb/s (1.6T) transceivers down the road.

That expansion will create more than 500 new jobs, which will more than double the facility’s current workforce of 450 employees. The new jobs will include engineering product management, distribution operations, customer experience, and finance.

AOI’s investment is part of a 10-year agreement “facilitated by” the City of Sugar Land Office of Economic Development and includes a $2 million incentive package from the city. The vendor claims that it will have the largest production capacity for AI-focused data center transceivers in the U.S. following the expansion.

AOI counts more than 4,100 employees worldwide across a research and development facility in Atlanta, and engineering and manufacturing facilities in Sugar Land, Taiwan, and China.

BEAD and BABA driving onshore plans

AOI’s onshoring is similar to moves by other optical vendors looking to take advantage of U.S. broadband expansion initiatives.

Nokia made a big splash in mid-2023 when it announced plans to partner with Wisconsin-based equipment manufacturer Sanmina to produce fiber-optic broadband network equipment. That event drew then-Vice President Kamala Harris and promised hundreds of new domestic jobs.

Nokia followed up that agreement by striking a deal with California-based Fabrinet to construct multirate optical modules for optical line terminals (OLTs) for optical networking equipment at Fabrinet’s facility in Santa Clara, California.

Corning also opened a new optical fiber production facility in Hickory, North Carolina, designed to help accelerate the availability of passive optical fiber to support broadband expansion. The vendor said the expansion would add “hundreds of jobs” to Corning’s existing North Carolina workforce of more than 5,000 employees.

Those efforts have been tied to the U.S. Broadband Equity, Access and Deployment (BEAD) program, which has a “Build America Buy America” (BABA) provision that is targeted at investing funds into products and services built in the U.S.