Deep|Coherent Lite Reshapes AI Optical Interconnects
Key Takeaways
The industry’s prevailing narrative of Coherent Lite still largely centers on DCI/LR/campus interconnect: the 2–20 km reach segment, where a lower-cost, lower-power coherent solution replaces the conventional IMDD, which is increasingly strained in mid-reach transmission beyond 400G/lane. This narrative is not wrong, but it captures only Coherent Lite’s “reach dimension” and misses the “system-architecture dimension,” where the real volume will come from. From an AI infrastructure standpoint, Coherent Lite’s most important use case — and the one most likely to scale — is not 2–20 km DCI or LR, but rather pairing with OCS in Google TPU / AI clusters.
OCS improves network-topology reconfigurability and expands the Scale-Up and Scale-Out interconnect scale; however, the cost is that each OCS node the optical link passes through adds insertion loss. OCS is fundamentally a passive device, introducing roughly 1.5–3 dB of additional loss. For conventional IMDD FR/DR links, the link budget is typically only a few dB; after subtracting OCS’s ~3 dB of loss and additional fiber/ connector losses, IMDD has almost no remaining link margin in the 2.4T/3.2T generations. In other words, the more OCS becomes the core component of AI cluster network expansion, the more exposed IMDD’s link budget bottleneck becomes.
Coherent Lite’s strategic significance is therefore not merely “pushing coherent down to 2–20 km,” but providing the next-generation optical transport solution for OCS-paired interconnect. Through a simplified coherent detection scheme, Coherent Lite can recover the link budget margin consumed by OCS, allowing the OCS architecture to continue scaling into the 2.4T/3.2T module era. In short, DCI/LR is the surface-level application the industry understands best, while OCS-paired links are Coherent Lite’s most central and scale-driven deployment scenario in AI infrastructure.
On the value-chain mapping: Nokia/Infinera, Lumentum, Coherent Corp, and Sumitomo Electric are the core InP beneficiaries; Marvell is the core DSP beneficiary; Semtech is the TIA beneficiary; TeraHop/InnoLight, Lumentum, and Coherent Corp are the core transceiver beneficiaries; while TSEM, Soitec, and AXT correspond respectively to the underlying area-amplification logic of SiPh foundry, Photonics-SOI substrate, and InP substrate. In 2028, Coherent Lite may bring $15–20 billion of incremental industry value, and this figure will rise further in 2029.
