Applied Optoelectronics Inc. (NASDAQ: AAOI) announced it received its first volume order for 1.6T data center transceivers from a major hyperscale customer. The order totals more than $200 million and is intended to boost network bandwidth for AI workloads.

The Sugar Land, Texas-based company expects the order to return this customer to its previous status as a 10% or greater revenue contributor. Shipments are scheduled to begin in the third quarter of 2026 and complete in the fourth quarter, following product qualifications.

"We are seeing a clear progression toward higher-speed optics as AI clusters scale, and our transceiver portfolio enables our customers to order both 400G and 800G or 1.6T from us," said Dr. Thompson Lin, founder, chairman and CEO of AOI.

The company is expanding its Taiwan facility and constructing a new facility in Sugar Land. Lin stated that AOI expects to have the capacity to produce over 500,000 units of combined 800G and 1.6T transceivers per month by the end of 2026, including both U.S. and overseas production.

"As GPU performance increases and AI cluster sizes grow, the network must scale accordingly, and we expect that 1.6T will become the logical next step for hyperscalers," said Stefan Murry, chief financial officer and chief strategy officer.

Applied Optoelectronics develops and manufactures optical and HFC networking products for AI datacenters, CATV and broadband fiber access networks. The company has facilities in Sugar Land, Atlanta, Taipei and Ningbo, China.