REDMOND, Washington, March 23, 2026, 08:46 PDT
Microsoft last week outlined a MicroLED-based cable design that it says could cut power use for short-range links inside AI data centers by about 50% and reach commercialization with industry partners in late 2027. Microsoft shares were up about 1.2% at $386.60 in Monday morning trade. 1
The timing matters because power is turning into a hard limit on AI expansion, not just a cost line. Alphabet President Ruth Porat said on Monday the United States was not moving “full throttle on energy,” while Reuters reported last month that the biggest U.S. AI sites now draw more than 1 gigawatt of continuous load, enough to power up to 850,000 homes. 2
Google last week expanded agreements that let utilities ask some of its data centers to cut electricity use during peak demand, making as much as 1 GW available for curtailment. Amazon has separately warned that grid delays are slowing data-center expansion in Europe. 3
Microsoft and MediaTek said on March 17 they had designed a next-generation active optical cable, or AOC, using tiny MicroLED light sources instead of lasers. The cable also uses imaging fiber originally developed for medical endoscopy and spreads data across hundreds of slower channels rather than a few very fast ones. 4
The companies said the design could use up to 50% less power than conventional laser-based optical cables while delivering copper-like reliability over longer distances inside a data center. Microsoft’s Paolo Costa said the system is expected to be commercialized late in 2027, after a proof-of-concept that miniaturized the hardware into a thumb-sized transceiver that can plug into existing data-center gear. 4
Doug Burger, a Microsoft technical fellow, said the work had “opened the door to a major leap in AI datacenter efficiency.” Frank Rey, Microsoft’s general manager of Azure Hyperscale Networking, said MicroLED brings “the pure efficiency of LED over a laser,” which he said has a direct effect on power use at scale. 4
Ron Westfall, vice president and analyst at HyperFrame Research, said the approach could give Microsoft an edge by “breaking the trade-off between power consumption and data volume.” If those lab results carry into production, he said, the company could lower the capital needed to build denser AI clusters. 5
The project lands in a broader contest over how AI clusters are wired. Reuters reported before Nvidia’s annual conference that analysts expected the chipmaker to explain investments in laser suppliers Lumentum and Coherent as it pushes optical connections deeper into large AI systems, even though affordability at scale remains a hurdle. 6
Microsoft is pairing the MicroLED push with hollow-core fiber for longer routes between facilities. The company said hollow-core fiber is already in some Azure regions and can deliver up to 47% faster data transmission and about 33% lower latency than conventional single-mode fiber. 1
But the MicroLED system is still pre-commercial, and the power-saving claims are based on lab tests and deployment estimates rather than production use. Alternatives are still moving, and investors have grown less patient with AI infrastructure spending; Reuters reported in January that Microsoft’s record AI outlay and slower cloud growth sent the stock down more than 6% in after-hours trade. 1
For now, the cable work sits inside a wider Microsoft effort to reduce the energy burden of its AI build-out. Reuters reported in February that the company is exploring superconducting power lines inside data centers and, separately, has pledged to keep buying enough renewable energy to match all of its electricity use. 7
