Mitsubishi Electric is struggling to keep up with global demand for optical components used to power AI in data centers.
First reported in Bloomberg, the Tokyo-based manufacturer is a key supplier of optic fiber communication devices that are used to link one server to another.
According to Masayoshi Takemi, an executive officer for the company’s semiconductor business, AI is propelling sales of Mitsubishi’s devices.
He said while the company is ramping up production capacity for optical devices by 50 percent compared to last year, it still will not be enough to meet demand.
Takemi added: “We may need to double what we’ll have in September.”
Mitsubishi Electrics controls almost half the global market for optical transmission devices in data centers.
The company’s semiconductor and devices arm earned less than four percent of the company’s revenue last fiscal year and optical devices comprise a small part of the business.
Demand for AI infrastructure continues to grow globally. However, shares in AI stocks in the US and Asia took a hit last month. Nvidia saw its value drop by around 15 percent, with chip makers Renesas Electronics and Tokyo Electron were also impacted.
Earlier this month, a research newsletter from Goldman Sachs warned that, despite large tech companies investing massive amounts in fueling generative AI, they have yet to demonstrate sustainable business models.
The investment banking firm estimates that around $1 trillion will be spent on AI infrastructure in the next year, but says that even if a 'killer application' emerges, it is unclear if it will generate the financial returns.