(Bloomberg) -- Mitsubishi Electric Corp. is struggling to meet sustained global demand for optical components used in data centers powering artificial intelligence.
The Tokyo-based maker of factory automation is a key supplier of optic fiber communication devices that link servers to one another. AI’s appetite for high-speed and high-volume calculations is propelling sales of Mitsubishi Electric’s devices, which boast low power consumption and heat emission, according to Masayoshi Takemi, an executive officer in charge of the company’s semiconductor and devices business.
Next month, the company is ramping up production capacity for optical devices to a level 50% above last year’s. “But that won’t be enough to meet the strong level of inquiries we’re getting,” Takemi said in an interview. “We may need double what we’ll have in September.”
Mitsubishi Electric controls almost half of the global market for optical transmission devices in data centers, in part because of its electro-absorption modulated laser diodes’ ability to balance both speed and output, according to the company. It wouldn’t be an exaggeration to say all US hyperscalers are Mitsubishi Electric customers, Takemi said, without naming clients. The US is home to some of the world’s biggest hyperscalers Amazon.com Inc., Microsoft Corp., Alphabet Inc., Meta Platforms Inc. and Apple Inc.
The executive’s comments are the latest sign of continued hunger for AI infrastructure, even as investors struggle to price the technology’s impact on companies’ future sales. Demand from the top five data center providers in the US is “very strong” and “still growing,” Takemi said.
Next-generation data centers are operating at speeds of 800 gigabits per second to 1.6 terabits per second, up from previous levels of around 400 gigabits per second, according to optical communications market research firm LightCounting.
Optical devices comprise a tiny part of Mitsubishi Electric’s business, which ranges from factory robots to train systems to power plant controls to satellite equipment. The semiconductor and devices arm earned less than 4% of the company’s revenue last fiscal year, with power semiconductors used in industrial machines and electric vehicles making up almost 90% of that sliver.
Regarding Japan’s power chip sector, where Mitsubishi Electric competes with domestic rivals Rohm Co. and Toshiba Corp., Takemi said he didn’t see an urgent need for consolidation. China is boosting output of such chips, providing heavy subsidies in a bid to raise its technological self-sufficiency. Japan has also been beefing up support to boost production of such chips, but concern is growing that the country may fall behind in a fragmented market.
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