The South Korean government is moving to localize optical communication technology for artificial intelligence data centers, or AIDCs. As AI data centers grow larger, how quickly tens of thousands of graphics processing units can be connected has emerged as a core competitive factor. Global big tech firms have also recently made optical communication a priority investment area, which is expected to further raise the need for South Korea to secure and commercialize its own foundational technology.
The Ministry of Science and ICT began recruiting companies and research institutions on Sept. 8 to develop a space-division multiplexing optical interface based on multi-core fiber for AI data centers, according to the telecommunications industry on the 13th. The long-term project, which runs through 2031 at the latest, is set to receive a total of 3.6 billion won in research funding.
Optical communication converts electrical signals into light and transmits data through optical fiber. Copper cables, which carry electrical signals, lose power efficiency as networks expand, while optical fiber can send large volumes of data quickly over long distances with less signal loss and lower power consumption. The importance of optical communication is growing further as AIDCs scale up and the number of GPUs installed inside them rises into the tens of thousands. No matter how many GPUs a data center secures, delays can occur if the vast amounts of data cannot move quickly between chips.
The technology the government aims to develop is a next-generation solution that allows a single strand of optical fiber to carry more data. Conventional fiber has a single core, the channel through which light travels, while multi-core fiber places several cores within one strand. The focus is on dramatically widening bandwidth for optical communication inside AIDCs and raising data processing speeds. The goal is to handle more data while connecting fewer strands of optical fiber, which serve as optical communication cables.
The telecommunications industry expects the research project to lift the overall technological competitiveness of the optical communication industry. Among South Korea's many materials, parts and equipment suppliers, few hold foundational technology in optical communication. In a report titled "Optical Fiber in the AI Era: Korea's Position and Challenges," released last month, the Korea Institute for Industrial Economics and Trade said, "Optical fiber is emerging as a core material for data infrastructure in the AI era, but Korea lacks the capacity to produce high value-added materials," adding that "domestic technology related to multi-core fiber is at an early stage."
Leading global companies in the United States and Japan, by contrast, have built vertically integrated systems that produce everything from high value-added materials to optical cables in-house, and are expanding into premium products. Fewer than about 20 companies worldwide are known to be capable of producing preform, the raw material for optical fiber.
According to the report, South Korea's optical fiber exports fell to $27 million in 2025 from $58 million in 2022, an average annual decline of 22.3%. The domestic optical fiber industry was pushed aside by low-price competition from China and India and subsequently failed to invest in developing optical fiber technology for AIDCs.
In the United States, the optical communication industry is moving past research and development into capacity expansion. Nvidia invested $2 billion each in Lumentum and Coherent this year, and said it would also invest up to $3.2 billion in Corning, the world's largest supplier of optical fiber for AI data centers. The amount committed to optical communication companies alone reaches as much as $7.2 billion, or about 9.67 trillion won. Lumentum, which mass-produces components including laser chips, is building a new plant in North Carolina to expand supply to Nvidia. Laser chips convert electrical signals into optical signals in AI data centers and send them through optical fiber. Corning plans to expand its optical connector production capacity in the United States tenfold and raise optical fiber output by 50%.
Analysts say localizing optical communication technology has become more urgent for a government that has signaled 550 trillion won in AI data center investment through a mega-project. With the domestic AIDC market expanding quickly, failure to secure next-generation optical communication technology would mean sourcing related equipment and materials from abroad. In the event of supply chain disruptions, even AIDC operating schedules could hinge on the circumstances of overseas suppliers. Nvidia's expansion beyond GPUs into networking and optical communication, which is widening its influence in the global AIDC ecosystem, is also increasing the need for domestic technology. Domestic telecommunications equipment companies are joining a government-led AIDC alliance and pursuing technology development. Woorinet, for one, was selected in May as the lead institution for an Institute of Information & Communications Technology Planning & Evaluation project to develop transmission technology between AI data centers, and research is under way. An official in the telecommunications industry said, "Optical communication and optical fiber technologies need to be included among core strategic technologies for materials, parts and equipment, with a comprehensive government support program in place."
