Applied Optoelectronics Inc. (NASDAQ: AAOI) is adding roughly 388,000 square feet of new manufacturing space in Pearland, Texas, bringing its total Houston-area production capacity to approximately 900,000 square feet. The move is designed to ramp up output of 800G and 1.6T optical transceivers, the high-speed networking components that AI data centers are devouring at an accelerating pace.

The company announced the expansion on April 17, 2026, framing the new Pearland facilities as a direct response to a pair of massive orders received the previous month.

The orders driving the buildout

In March 2026, AOI landed what it called a landmark volume order for 1.6T data center transceivers worth more than $200 million from a major hyperscale customer. Shipments for that deal are expected to begin in Q3 and Q4 of 2026.

Two weeks later, the company secured an additional order for 800G transceivers valued at over $53 million. Combined, those two orders alone represent more than half of AOI’s entire 2025 revenue figure of $456 million.

AOI is now projecting it will exceed $1 billion in revenue for 2026, roughly doubling what it pulled in last year.

CEO Dr. Thompson Lin has pointed to higher-speed optics as the company’s core strategic focus, noting that these components are essential for scaling AI clusters.

Nearly 900,000 square feet and counting

The Pearland expansion involves two buildings that will complement AOI’s existing operations in Sugar Land, Texas. When fully operational, the company says it will boast the largest US production capacity for 800G and 1.6T transceivers.

The Sugar Land facility itself is undergoing a separate 210,000-square-foot expansion, expected to be operational by summer 2026. That project received a $20.9 million grant from the Texas Semiconductor Innovation Fund, a state-backed program aimed at attracting and retaining chip and component manufacturing jobs.