In recent years, the evolution of data center technology has been fueled by the increasing demand for high-speed data transmission, particularly in short-distance networking scenariosActive Electrical Cables (AEC) have emerged as a critical innovation in this landscape, offering a robust solution that caters to the growing need for efficient electrical connections in data centersUnlike traditional configurations, AEC systems integrate advanced signal processing capabilities, enabling them to significantly enhance both signal quality and transmission distances compared to passive copper cables like Direct Attach Copper (DAC) solutions.

AEC technology is gaining traction primarily due to its ability to support data rates that keep pace with the burgeoning requirements of artificial intelligence (AI) applications and high-performance computingThe AEC architecture features integrated signal retimer chips at each end, which help recover and enhance signals over longer distances, achieving connectivity up to 7 metersThis capability positions AEC as an attractive alternative within the competitive ecosystem of data transmission solutions.

The recent Global Technology Conference (GTC) hosted by Nvidia highlighted the significance of innovations in copper solutionsNvidia unveiled its cutting-edge GPU chip, the GB200, and the innovative NVL72 cabinet architecture, which introduces copper connections within cabinet interconnectionsHigh-speed copper cables are particularly beneficial in data center settings due to their impressive efficiency in heat dissipation, competitive costs, and reduced power consumption compared to traditional optical fiber methodsAs a result, the industry is witnessing a significant pivot towards copper-based solutions for short-distance transmission.

The landscape of data center interconnects comprises a plethora of solutionsNotably, there are four primary categories: Active Optical Cables (AOC), DAC, Active Copper Cables (ACC), and AEC

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AOC utilizes fiber optics, providing lightweight and compact designs capable of up to 100 meters transmission but at higher costs and power consumptionOn the other hand, DAC, while economical and efficient for short distances (generally under 3 meters), experiences signal attenuation due to the physical properties of copper; for instance, at 224G, the effective transmission distance shrinks to just 1 meterThe ACC builds upon the DAC foundations by adding signal equalizers and drivers, facilitating even better performance, albeit with limited significant enhancement.

The AEC solution stands out from its competitors since it retains the fundamental design of DAC but incorporates retimer chips to overcome the inherent limitations of copper cablesThis technology provides a balance between performance and cost, enabling affordable, high-speed connections for data centers without compromising on reliability.

Nvidia, among other enterprises, recognizes the value of AEC technology and is investing in its development and implementation, recognizing that advanced copper interconnects could shift paradigms in server architecture and data center designsThe company has previously focused heavily on DAC and ACC, which have served well for Ethernet and Infiniband applicationsAs they expand into 1.6T AEC solutions, it is clear that the industry is preparing for increased throughput and efficiency.

Beyond Nvidia, large Cloud Service Providers (CSPs) are quickly adopting copper interconnects as they reassess the relevance of traditional optical networks in certain scenariosThe reliability and affordability of copper as compared to optical links are further propelling the growth of AEC solutionsNotably, with the growing trend of AI-driven applications requiring massive data processing capabilities, the industry is putting significant emphasis on minimizing costs while maximizing performance and stability within clusters.

Notably, AEC provides a compelling UI for CSPs looking to achieve these aims

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The technology’s ability to provide longer transmission distances compared to traditional DAC models, while bypassing the complexities of optical to electrical signal conversions, is leading to enhanced cluster stability – a crucial factor as data centers expand and become more intricateThe prospect of reducing costs while improving performance makes AEC a strategic choice for organizations scaling their computational capabilities.

Furthermore, as the demand for AEC technology grows, it is noteworthy that Chinese manufacturers hold several competitive advantages in this arenaThese companies possess robust R&D capabilities, production efficiencies, and cost control mechanisms that enhance their market offeringsIn this rapidly evolving landscape, the drive for interoperability – with chip manufacturers like Nvidia wishing to integrate various technology components while CSPs seek modular solutions – has placed companies from China in a favorable position.

Leading AEC manufacturers globally include major players such as Credo and AmphenolCredo stands out with its offerings reaching up to 1.6T in speed and 2.75 meters in distance, positioning itself as a pivotal supplier for major tech giants like Microsoft and AmazonNotably, during the first quarter of 2025, Credo reported impressive revenue growth of 70%, indicative of AEC's accelerating adoption in the market.

Amphenol, recognized as a premier connector manufacturer, has developed a range of high-speed solutions, including CXP passive copper cables and QSFP series products, and has positioned itself as a leading supplier of copper cables for NvidiaOther key players in the field, particularly in China, include companies like Woori, Linkwell, and Jizhong, who are rapidly emerging as formidable contenders in the AEC and high-speed cable manufacturing arenas.

The barriers to producing high-speed copper cables are chiefly centered around specialized equipment capabilities – specifically, machinery like Rosenthal's foam extrusion equipment, which is instrumental in the cable manufacturing process

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