Taiwan’s FICG to Triple Malaysia Manufacturing Capacity by 2028 Amid Tightening AI Data Center Supply Chain

In Johor, Malaysia, a Taiwanese manufacturer that supplies critical optical communication components for the high-speed networks inside AI data centers says it will dramatically expand its local production footprint to keep pace with a fast-tightening global supply chain.

FICG, a parts maker whose products are used in optical links that connect servers and switches, plans to more than triple its manufacturing capacity in Malaysia by the end of 2028. The company says the ramp-up is aimed at addressing surging demand for the optical hardware required to move vast volumes of data—an essential requirement as cloud providers and chipmakers build out AI computing clusters.

The expansion comes as FICG deepens a “China plus one” manufacturing strategy, shifting a larger share of output to locations outside China. The company says the push has been driven in part by requests from U.S. customers seeking more geographically diversified supply, reflecting the broader trend among technology supply chains to reduce concentration risk and improve resilience.

FICG only recently began producing in Malaysia at scale. Earlier this year, it started mass production at its first Malaysian factory, operated through its subsidiary Pro3C. This week, the company used the occasion of an official opening ceremony for the site to outline its next phase of growth, signaling that Malaysia will play a substantially larger role in its global manufacturing network over the next several years.

Johor—positioned near Singapore and increasingly marketed as a hub for electronics and data-center-related infrastructure—has attracted growing investment linked to AI-era computing demand. For suppliers like FICG, the region offers access to established industrial parks, logistics routes, and a talent base aligned with electronics manufacturing, making it a practical platform for scaling output of precision components.

By committing to a major capacity increase through 2028, FICG is effectively betting that the current demand spike for AI data center networking gear will persist. Optical communication components have become a focal point for the industry as advanced AI systems require not only powerful processors, but also low-latency, high-bandwidth interconnects to keep GPUs fed with data and synchronize work across large clusters. Constraints in the optical supply chain can therefore ripple quickly through data center buildouts, potentially delaying deployments or raising costs.

FICG’s plan underscores how suppliers across the hardware ecosystem are racing to expand production while also rebalancing where that production takes place. As AI infrastructure spending continues, customers are increasingly scrutinizing both capacity and country risk in the upstream supply chain, pushing component makers to provide additional manufacturing options beyond a single geography.

Why it matters

AI data centers depend on optical networking to function at scale, so shortages in these components can slow deployments and raise costs for cloud providers and enterprise customers. FICG’s Malaysia expansion is another signal that “China +1” is accelerating, especially where U.S. customers want diversified sourcing. Watch whether other optical suppliers follow with similar moves—and whether new capacity is sufficient to ease the current supply crunch.