Summary of OCS Switch Technology, Trends, and Market Potential Industry Overview - The OCS (Optical Circuit Switch) technology is applied in traditional and AI data centers, enabling low-power and efficient data transmission through optical channels. The market potential is projected to be 30-40 times larger than the current electrical switch market [1][6][26]. Key Insights and Arguments - **Market Growth**: Google has scaled up the deployment of OCS in its TPU network, purchasing approximately 12,000 units. If other potential clients like Microsoft, NVIDIA, Oracle, and Meta adopt OCS at scale, the market could expand significantly, with expectations of reaching 300,000 units in the coming years [1][6][26]. - **Technological Advancements**: Google’s OCS switch has achieved a thousand-fold increase in speed while reducing power consumption, showcasing significant progress in the switch technology sector [2][4]. - **Core Advantages**: OCS technology eliminates the need for optical-electrical conversion, directly interconnecting different cards through optical channels, which significantly reduces power consumption. For instance, a 51.2T electrical switch consumes about 3 kW, while OCS can save nearly half of that power [1][9]. - **Industry Initiatives**: The establishment of the Optical Switch Project Group by the Open Compute Project (OCP) indicates a growing recognition of OCS as a complement to traditional electrical switches and CPU switches [1][7]. Important Developments - **Domestic Collaborations**: In China, Xizhi Technology, in collaboration with ZTE and Biran Technology, launched a full-optical OCS supernode network, indicating a trend towards advanced optical interconnection solutions [1][8]. - **Application in AI Networks**: OCS is seen as a future trend in AI networks due to its low power and low latency characteristics, although current switching times may still favor electrical switches for frequent data exchanges [13][15]. - **Investment Returns**: NVIDIA has reported that by adding OCS devices, they can achieve automatic switching in case of hardware failures, reducing the risk of interruptions in large model training, with an investment payback period of about one to two years [4][14][16]. Market Dynamics - **Future Demand**: Google is expected to procure between 16,000 to 20,000 OCS switches by 2026, with a potential market value of around $1 billion based on a unit price of $50,000 [25]. - **Long-term Market Potential**: The OCS market is projected to exceed $2 billion by 2029, with significant interest from major players like Microsoft, Oracle, and NVIDIA, indicating a shift towards OCS solutions [26][30]. - **Competitive Landscape**: Traditional electrical switches currently dominate the market, with an estimated 800,000 to 1 million units. However, OCS is expected to capture a 30% market share in the next few years, potentially reaching over 300,000 units by 2030 [30]. Additional Insights - **Technological Variants**: OCS technology includes various solutions such as MEMS, silicon-based liquid crystal, and piezoelectric ceramics, each with unique advantages and challenges [5][28]. - **Supply Chain Dynamics**: Key suppliers for Google’s OCS switches include Lumentum, Claudeline, and Coherent, with significant contributions from domestic manufacturers like Saiwei Electronics and Guanghua Technology [19][32][33]. - **Adoption Trends**: While overseas data centers like Google have adopted OCS extensively, domestic centers are beginning to explore its use, indicating a gradual shift in the industry [29]. This comprehensive overview highlights the transformative potential of OCS technology in the data center industry, emphasizing its advantages, market dynamics, and future growth prospects.