In the first half of the year, the collaboration between TSMC, a major semiconductor foundry, and Avicena, a developer of Micro LED optical interconnect technology, garnered widespread attention in the Micro LED industry and related fields, significantly boosting the popularity of Micro LED in non-display applications. Recently, Microsoft also announced related progress, once again bringing Micro LED-based optical interconnect technology into the spotlight and sparking a new wave of discussion.
Microsoft's MOSAIC "Wide and Slow" Architecture Disrupts the Traditional "Narrow and Fast" Communication Model . In AI data centers and high-performance computing (HPC) clusters, traditional interconnect technologies rely on a "narrow and fast" architecture, transmitting data through a few high-bandwidth channels. In this model, the speed of each channel must continuously increase to achieve higher total throughput, such as 800Gbps or 1.6Tbps. However, increasing the speed of a single channel requires more complex and power-consuming driver circuitry and signal processing, while also placing stringent demands on the modulation speed, heat dissipation, and reliability of the light source, leading to a surge in cost and technological barriers.
Microsoft's research team has developed the MOSAIC (Micro LED Optical System for Advanced Interconnects) optical interconnect solution, which disrupts the traditional "narrow and fast" communication mode with a "WaS" (Wide and Slow) architecture. This means it uses hundreds of low-speed parallel Micro LED channels (e.g., 2Gbps/channel) to replace a few high-speed channels for data transmission. The core advantage lies in leveraging the inherent advantages of Micro LEDs—low power consumption, low cost, and high reliability—to compensate for the lack of speed through sheer quantity. For example, an 800Gbps link would require 400 Micro LED light sources and corresponding fiber optic channels, while a 1.6Tbps link would require 800 and 800 fiber optic channels, respectively.
This design directly modulates Micro LEDs and combines them with multi-core imaging optical fibers, replacing complex and power-consuming electronic components with a low-power analog backend. Furthermore, it relies on multi-core imaging optical fibers to achieve high-density transmission—a single optical fiber can integrate thousands of cores, each of which independently transmits one optical signal. This provides a new possibility for solving the interconnection bottlenecks of AI data centers (the electromagnetic interference and density bottlenecks of traditional copper cables), and also indicates that the technological path and industrial landscape of data center optical communication may usher in a profound transformation.
In summary, Microsoft MOSAIC elevates Micro LED from a passive light-emitting element to an active, programmable communication core, which to some extent means that Micro LED is accelerating its crossover into the high-value "non-display" field of AI optical communication, opening up broad prospects for it as a multifunctional "photonic engine".
LED manufacturers are strategically positioning themselves in the Micro LED optical interconnect market . It is understood that 400Gbps and 600Gbps solutions have been widely adopted. According to research, by 2025, global shipments of optical transceiver modules with speeds of 400Gbps and above will exceed 31.9 million units, representing an annual growth rate of 56.5%.
Based on this, if Microsoft's optical interconnect solutions are widely adopted in the market in the future, and higher bandwidth solutions are gradually implemented, the demand for Micro LED is expected to increase significantly. At that time, companies involved in the LED-related optoelectronic industry chain, such as Avicena, ams OSRAM, TSMC, Lumileds, Hyperlume, Fucai, Dingyuan, Sanan Optoelectronics, MTC, BOE Huacan Optoelectronics, Jucan Optoelectronics, Nationstar Optoelectronics, Dongshan Precision, and Jufeng Optoelectronics, are all likely to benefit.
Judging from the existing layout of manufacturers and inferring future potential, MTC's layout in Micro LED optical interconnect is scarce and unique, and it has a differentiated advantage among domestic companies that are involved in both Micro LED and optical interconnect.
In terms of scarcity, MTC's accumulated technological and production capacity advantages in the LED display field can be transferred to optical interconnect scenarios. Its subsidiary, MTC Semiconductor, has long been engaged in LED chip R&D and production, and has successfully accumulated key technologies such as Micro LED epitaxial growth, chip etching, and mass transfer. This technical experience helps to lower the R&D and mass production threshold of core optical interconnect devices, an advantage that is relatively rare among LED and optical communication companies.
In terms of uniqueness, although other companies in the market are simultaneously involved in the LED and optical communication industries, Shenzhen MTC Co., Ltd. is the only company that possesses Micro LED technology and has formed a vertically integrated industrial chain in the optical communication field. Currently, the company has established a complete industrial chain from optical chips to optical devices to optical modules, and is gradually upgrading and transforming its optical communication industrial chain from the primary telecommunications market to the data communication field.
In the first half of 2025, MTC Co., Ltd. achieved revenue of 309 million yuan from optical communication devices and modules. While not yet profitable, the company revealed that its operating situation is improving month by month and it is expected to turn a profit in the second half of the year. Specifically, its market share of BOSA devices used in optical access networks has rapidly increased to 40%, which is conducive to its accelerated expansion in the optical module field. Meanwhile, its 100G and below rate optical module products have successfully completed product verification and achieved mass production shipments with several leading optical communication equipment manufacturers. In addition, high-speed optical module products above 400G have also been developed and are expected to be launched on the market quickly in the future.
In the optical chip sector, MTC Semiconductor's 2.5G DFB laser chip has been fabricated on its own production line, and it currently has the mass production capability for 25G DFB laser chips. It plans to launch DFB and EML optical chips with speeds of 50G and above, as well as CW light sources and other related optical chip products in 2026. Although Micro LED is not yet directly used in the optical interconnect market, MTC Semiconductor's Micro LED technology can adapt to the transmitter requirements of MOSAIC multi-channel parallel architecture, and its optical module products are compatible with QSFP/OSFP packaging standards. Moreover, MTC's accumulated experience in the optical communication field in recent years is expected to pave the way for the adoption of Micro LED.
It is evident that MTC is currently exhibiting strong growth momentum in this field. Combining its synergistic advantages across its vertical industry chain, breakthroughs in Micro LED technology (such as a chip yield rate of 99%), and a relatively broad patent portfolio, MTC is attracting significant attention in the optical communication sector.
Micro LED, a non-display technology, has the potential to support display technology . Although Micro LED is not yet mature in the field of optical interconnects and faces challenges such as the development of high-bandwidth devices and the availability of efficient algorithms, the current pace of progress by manufacturers in the optical communication industry chain suggests that Micro LED technology has the potential to accelerate its application in optical interconnects, thereby driving the large-scale production of Micro LED technology in the display field.
It is understood that Micro LED display technology still faces bottlenecks in chip manufacturing processes and costs, such as mass transfer yield, which has hindered its commercialization progress. In contrast, for AI servers, the actual communication performance and long-term reliability of optical interconnects are primary considerations. This means that Micro LED is expected to achieve mass production first in the AI optical communication field, thereby driving equipment investment and supply chain improvement, forming a virtuous cycle of "using non-display technologies to support display technologies," and ultimately accelerating its cost optimization and penetration in the display field.
According to the "2025 Micro LED Display and Non-Display Application Market Analysis" report, the market value of Micro LED display application chips is at an inflection point poised for explosive growth, while non-display applications such as AI-accelerated optical interconnects are the future growth drivers. In other words, AI's exponential demand for high-speed, low-power interconnects has found a perfectly matched high-value application scenario for Micro LED technology, which possesses high modulation speed and low power consumption characteristics. This is one of the "niche points" that Micro LED can tap into.
The involvement of TSMC and the entry of Microsoft indirectly confirm the potential of Micro LED in the field of optical interconnects. With the support of TSMC and other players in the semiconductor industry, Micro LED is expected to enter a large-scale wafer foundry era in the optical interconnect field, creating more substantial incremental space for LED manufacturers. Based on this, it will in turn accelerate breakthroughs in Micro LED display technology, achieving dual-engine growth in both display and non-display applications. At that time, the Micro LED market size will experience even greater growth.
In terms of market landscape, the Micro LED optical interconnection track is no longer a competition between manufacturers in a single segment, but an ecosystem battle involving cloud service providers (CSPs) (Nvidia, Google, Amazon, Microsoft, Meta), LED and photodiode manufacturers, panel manufacturers, and optical module manufacturers. This upgraded competition is now underway. (Text: Janice)
