Nomura's latest research report indicates that as AI model training scales surpass the trillion-parameter threshold and inference demand grows exponentially, the expansion of a single AI cluster or data center faces constraints in power, cooling, and land at both the scale-up and scale-out levels. This has given rise to distributed training—interconnecting multiple clusters or data centers into a unified compute pool for scheduling—which requires support from scale-across networks. Cross-domain environments demand high-speed optical network technologies, such as coherent optical modules, hollow-core optical fiber, and DCI/WAN/metro routers and switches, to build backbone networks across sites.

Compared with traditional DCI (data center interconnect), cross-domain networks impose higher networking requirements on bandwidth, latency, and packet loss, necessitating support from advanced technologies including high-speed coherent optical transceivers (800G/1.6T), optical circuit switches (OCS), and hollow-core optical fiber. Nomura believes the development of cross-domain networks will accelerate demand for these technologies. The firm expects Yangtze Optical Fibre and Cable Joint Stock Ltd (HKG: 06869) to benefit from the commercialization of hollow-core optical fiber, while Zhongji Innolight Co Ltd (SZSE: 300308) and Accelink Technologies Co Ltd (SZSE: 002281) will benefit from growing demand for high-speed coherent optical transceivers. The brokerage has a "Buy" rating on all three stocks.

Additionally, NVIDIA Corp (NASDAQ: NVDA) has introduced the concept of "scale-in," which uses DPUs and Ethernet to offload and accelerate traffic such as user access, data processing, storage read/write, and security isolation at the north-south boundary of AI factories. Scale-in connects AI factories and enterprise data to AI compute power, and Nomura believes it will become increasingly important in the era of agentic AI.

Key Technologies in Cross-Domain Networks: High-Speed Coherent Optical Modules, OCS, and Hollow-Core Optical Fiber

From an optical module perspective, IM-DD (intensity modulation-direct detection) modules used for scale-out have a limited transmission distance of under 2 kilometers, whereas coherent optical modules can extend to 80-120 kilometers, making them better suited for long-distance cross-domain scenarios. Furthermore, coherent-lite transceivers, first proposed by Alphabet Inc (NASDAQ: GOOGL) in 2021, utilize a simplified DSP. Nomura expects coherent-lite transceivers with enhanced DSPs will be adopted for cross-domain networks. Additionally, as noted in the firm's report "Global AI Trends Tracker—Optical Circuit Switches at the Heart of AI Networks," OCS, serving as all-optical switches, can provide flexible networking over long distances and high bandwidth, potentially becoming a key component in cross-domain networks.

On the fiber front, hollow-core optical fiber replaces quartz with air, inert gas, or vacuum as the transmission medium, achieving ultra-low-loss transmission latency compared with traditional fiber. This makes it more suitable for cross-domain networks that demand low latency.

Cross-Domain Network Total Addressable Market (TAM) and Competitive Landscape Analysis

Management at Ciena Corp (NYSE: CIEN) projected during its fiscal second-quarter 2026 earnings call that the cross-domain network market will reach $8-10 billion by 2029. Nomura believes major players in coherent optical transceivers, OCS, and optical fiber are all likely to benefit from this incremental market. In the 400G/800G ZR/ZR+ module segment, Marvell Technology Inc (NASDAQ: MRVL), Acacia—a subsidiary of Cisco Systems Inc (NASDAQ: CSCO), Ciena Corp (NYSE: CIEN), and Nokia Corp (NYSE: NOK) remain the primary players.

Core suppliers of hollow-core optical fiber include Yangtze Optical Fibre and Cable Joint Stock Ltd (HKG: 06869), Hengtong Optic-Electric Co Ltd (SSE: 600487), Lightera—a subsidiary of Furukawa Electric, and Relativity Networks. Alphabet Inc (NASDAQ: GOOGL), Coherent Corp (NYSE: COHR), and Lumentum Holdings Inc (NASDAQ: LITE) are currently the main participants in the OCS market.