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• Broadcom for fiber optic network components. (AAOI specializes in the optical components that power internet and data center networks, much like Broadcom supplies a wide range of semiconductor and networking components.)
• Intel for fiber optic data center components. (While Intel makes the "brains" of computers, AAOI makes the critical optical components—like lasers and transceivers—that enable high-speed data transmission within data centers and fiber networks.)

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• Data Center Transceivers: Optical transceivers that enable high-speed data transmission within large-scale data centers.
• Cable Television (CATV) Products: Fiber optic transmitters, receivers, and other components for delivering broadband services over hybrid fiber-coaxial networks.
• Industrial Lasers and Components: High-performance lasers and optical components used in diverse applications such as industrial manufacturing, medical equipment, and telecom infrastructure.

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Applied Optoelectronics (AAOI) primarily sells its products to other companies, operating on a Business-to-Business (B2B) model. Their optical components and transceivers are largely consumed by major players in the internet data center and cloud services market.

Based on their recent SEC filings, including their 2023 10-K, AAOI's major customers include:

• Microsoft Corporation (Symbol: MSFT)
• Amazon.com, Inc. (Symbol: AMZN)
• Meta Platforms, Inc. (Symbol: META)

These companies utilize AAOI's products for their vast data center infrastructure, enabling cloud computing, online services, and social media platforms.

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Chih-Hsiang (Thompson) Lin, Chief Executive Officer; Chairman; President

Dr. Lin founded Applied Optoelectronics, Inc. in February 1997 and has served as its President and Chief Executive Officer since its inception. He has also served as Chairman of the Board since January 2014. Prior to founding AOI, Dr. Lin served as a research associate professor and senior research scientist at the University of Houston. He holds a B.S. in Nuclear Engineering from National Tsing Hua University and an M.S. and Ph.D. in Electrical and Computer Engineering from the University of Missouri—Columbia.

Stefan J. Murry, Chief Financial Officer; Chief Strategy Officer

Dr. Murry has served as Chief Financial Officer of Applied Optoelectronics since August 2014. He also holds the title of Chief Strategy Officer since December 2012. His extensive tenure at AOI includes roles as Vice President of Sales and Marketing from June 2004 to December 2012, Director of Sales and Marketing from January 2000 to June 2004, and Senior Engineer of Device Packaging from February 1997 to January 2000. Before joining AOI, Dr. Murry was a Research Associate and Mission Control Specialist with the Space Vacuum Epitaxy Center in Houston, Texas. He earned B.S. and M.S. degrees in Physics and a Ph.D. in Electrical Engineering from the University of Houston.

Hung-Lun (Fred) Chang, Senior Vice President and North America General Manager

Dr. Chang has served as Senior Vice President and North America General Manager of the Optical Component Business Unit since October 2012. His previous positions at Applied Optoelectronics include Vice President of the Optical Module Division, Director of Manufacturing, and Deputy Packaging Manager. Before joining AOI, he held roles as Deputy Manager of the Optical Active Component Group at Hon-Hai Precision Industry Co., Ltd. and as a researcher and project manager at Chunghwa Telecom Co., Ltd. Dr. Chang holds a B.S. in Electrophysics and a Ph.D. in Electro-Optical Engineering from National Chiao Tung University in Taiwan.

David C. Kuo, Senior Vice President; Chief Legal and Compliance Officer; Secretary

Mr. Kuo has served as Senior Vice President and Chief Legal Officer since June 2023, General Counsel and Chief Compliance Officer since August 2013, and Corporate Secretary since November 2012. Earlier in his career at AOI, he served as Assistant General Counsel and Asia Legal Manager. Mr. Kuo received a J.D. from South Texas College of Law and a BBA degree in Real Estate from Baylor University.

Todd McCrum, Senior Vice President and General Manager of Broadband Access Business Unit

Mr. McCrum has served as Senior Vice President and General Manager of Broadband Access since June 2023.

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The key risks to Applied Optoelectronics' (AAOI) business are primarily centered around its financial stability, intense market competition, and significant customer concentration.

1. Financial Performance and Profitability Challenges: Applied Optoelectronics has faced a concerning trend of consecutive net losses, leading to a substantial accumulated deficit. For instance, in 2024, the company reported a net loss of $186.7 million and an accumulated deficit of $451.9 million, raising questions about its long-term financial sustainability. This financial weakness can impede AAOI's ability to invest in crucial research and development or expand its market presence without potentially diluting shareholder value or increasing debt. Additionally, the company has disclosed a material weakness in internal controls over financial reporting, which poses a risk of material misstatements in financial statements and can undermine investor confidence.
2. Intense Market Competition and Rapid Technological Change: AAOI operates in a highly competitive optical networking market, contending with larger and more resourced rivals such as Intel Corporation, Lumentum Holdings, Inc., Broadcom, and Cisco. These competitors can leverage their scale and capital to acquire new technologies or develop products that may displace AAOI's offerings. The industry is also characterized by rapid technological evolution; for example, some competitors are already shipping 1.6T transceivers, while AAOI is focused on qualifying its 800G products. This intense competitive landscape necessitates continuous innovation and substantial investment in research and development, which can strain AAOI's financial resources and require a delicate balance between innovation and cost management.
3. Customer Concentration and Dependence on Key Customers: A significant portion of Applied Optoelectronics' revenue is derived from a small number of key customers, particularly in the internet data center market, including major clients like Microsoft and Oracle in 2024. This reliance creates a vulnerability where the loss of, or a substantial reduction in orders from, any of these key customers could severely impact AAOI's revenue and overall operations. Furthermore, there is a risk that major hyperscale and cloud customers might increasingly pursue in-house optical component production, which could erode AAOI's pricing power and narrow its addressable market.

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One clear emerging threat for Applied Optoelectronics (AAOI) is the increasing adoption and development of Co-Packaged Optics (CPO) technology within hyperscale data centers. CPO integrates optical and electrical components directly into the same package as the switch ASIC, potentially replacing or significantly reducing the need for traditional pluggable optical transceivers, which constitute a significant portion of AAOI's current revenue. While AAOI is also developing CPO solutions, a rapid industry transition could disrupt demand for its existing product lines, posing a substantial challenge if the company cannot pivot quickly enough or if competitors gain a technological lead in this evolving market segment.

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Applied Optoelectronics (AAOI) addresses several key markets with its fiber-optic networking products, primarily serving the internet data center, cable television (CATV), fiber-to-the-home (FTTH), and telecommunications sectors.

The addressable markets for Applied Optoelectronics' main products and services are sized as follows:

• Internet Data Center Market (Optical Transceivers/Pluggable Optics):
  • The global pluggable optics for data center market was valued at approximately US$ 5.23 billion in 2023 and is projected to reach US$ 12.35 billion by 2031.
  • The global optical transceiver market in data centers was valued at USD 13.6 billion in 2024 and is projected to reach USD 25.0 billion by 2029.
• Cable Television (CATV) System Market:
  • The global CATV system market size was around USD 57.31 billion in 2024 and is projected to reach USD 111.70 billion by 2034. Another estimate places the global market at US$ 50.5 billion in 2024, growing to US$ 64.2 billion by 2031. North America holds a significant share of this market.
• Fiber-to-the-Home (FTTH) Market:
  • The global Fiber to the Home (FTTH) market is projected to grow from USD 27,575 million in 2024 to USD 126,509 million by 2034. Other sources estimate the global market at USD 62.64 billion in 2024, or USD 51.30 billion in 2023, expected to reach USD 142.24 billion by 2032. North America holds approximately 35% of the FTTH market share, with Asia Pacific also holding a major share.
• Broadband Access Services Market (for Internet Service Providers):
  • The global broadband internet access services market was valued at USD 418.65 billion in 2023 and is expected to reach USD 883.32 billion by 2032. Another report values the global market at USD 497.47 billion in 2024, projected to grow to USD 1062.73 billion by 2033. North America holds the largest share of the global broadband market.

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Applied Optoelectronics (AAOI) is poised for future revenue growth over the next 2-3 years, driven by several key initiatives and market trends across its core businesses. These drivers include:

1. Increasing Demand for High-Speed Data Center Transceivers (400G, 800G, and 1.6T)
   The company anticipates significant revenue growth from the expanding demand for high-speed optical transceivers in internet data centers. Applied Optoelectronics has reported strong sequential growth in its data center business, fueled by new orders for its 400G products and initial orders for 800G products from new hyperscale customers. The company is also making significant progress in its 800G product line, including major hyperscaler qualification, with production capacity expected to reach 100,000 units per month by year-end, increasing to over 200,000 by mid-2026. Additionally, there is notable interest and accelerated research and development spending for 1.6 terabit transceivers.
2. Growth in the CATV Market Driven by DOCSIS 4.0 Upgrades and New Products
   Applied Optoelectronics expects continued robust performance in its Cable Television (CATV) business. This growth is largely driven by Multiple System Operator (MSO) customers transitioning from DOCSIS 3.1 to DOCSIS 4.0 architectures. The company's 1.8 GHz amplifiers and the newly introduced Quantum18 product series, designed to facilitate 1.8GHz upgrades and support DOCSIS 3.1 and DOCSIS 4.0 Remote PHY Devices, are key contributors. New Quantum18 products are expected to be available for shipping in early 2025. Furthermore, the introduction of new software solutions, such as the QuantumLink HFC Remote Management solution with AI intelligence modules, is expected to contribute to achieving over $300 million in CATV revenue in the coming year.
3. Expansion to New Hyperscale Customers and Strengthening Strategic Partnerships
   AAOI has been actively expanding its customer base within the data center segment. The company has begun receiving initial orders for 400G products from a new large hyperscale customer, bringing its reach to three out of the five largest hyperscale data center customers in the U.S. Strategic partnerships with major hyperscaler clients, including a notable $4 billion, 10-year contract with Amazon for data center equipment, are also seen as fundamental drivers for revenue acceleration in high-growth sectors.
4. Increased Production Capacity and U.S.-based Manufacturing
   To meet anticipated demand, Applied Optoelectronics is expanding its manufacturing facilities, including a 210,000 sq. ft. facility in Sugar Land, Texas. This expansion aims to significantly increase production capacity for high-speed transceivers. The company anticipates achieving a production capacity of 100,000 units of 800G transceivers per month by year-end (2025), with approximately 35% of this production occurring in the U.S. This focus on U.S.-based manufacturing is a strategic advantage, aligning with a growing preference among hyperscalers for diversified and secure supply chains outside of Asia.

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Share Issuance

• Applied Optoelectronics completed a public offering of common stock that generated $342.6 million in cash inflows as of Q3 2025.
• Over the past two years (from August 2025), the company raised over $400 million in net proceeds from open market sales and secondary offerings, resulting in outstanding common shares almost doubling.
• On July 30, 2025, the company retired remaining 2026 convertible notes by issuing 239,404 shares.

Capital Expenditures

• Capital expenditures were approximately -$154.55 million in the last 12 months.
• Year-to-date (as of September 30, 2025), cash flow used in investing activities was $125.7 million, indicating significant capital expenditure intensity.
• The company is actively investing in building capacity for high-speed transceiver production in both the U.S. and Taiwan. Applied Optoelectronics also announced an investment of $150 million over the next five years for expansion in Sugar Land, Texas, expecting to create 500 jobs.