Recently, the global semiconductor giant TSMC announced a partnership with U.S. startup Avicena to jointly produce Micro LED-based optical interconnect products. The goal is to replace traditional electrical connections with advanced optical communication technologies, providing low-cost, high-efficiency data transmission solutions to meet the surging communication demands of graphics processing unit (GPU).

This move has drawn significant attention from the industry, sending two clear signals:

First, it reflects a growing trend where Micro LED technology is gradually expanding beyond traditional display applications and moving into emerging areas like optical communication.

Second, it underscores the ambition of Taiwanese manufacturers to leverage their strengths, pursue differentiated competition, and achieve a “lane-changing overtake” in the global technology landscape.

Micro LED: Extending from Display to Non-Display Applications
Due to its small size, high potential modulation rate, and excellent integration with silicon-based CMOS processes, Micro LED can be manufactured into high-density arrays for parallel optical communication. This allows for much higher bandwidth density and potential energy efficiency than copper wiring in short-distance applications. In other words, Micro LED optical interconnect technology offers a promising solution to break through the performance limitations of traditional electrical interconnects and could support the creation of more powerful and efficient AI hardware architectures.

Avicena is focused on developing ultra-low-energy optical link technology known as LightBundle™. Based on GaN Micro LED arrays, this highly parallel optical interconnect technology can be integrated into various high-performance CMOS integrated circuits. Compared to traditional copper interconnect solutions, LightBundle™ offers advantages such as low power consumption, low latency, wide coverage, and high bandwidth density. Thus, it is a perfect fit for high-performance computing (HPC), artificial intelligence (AI) and machine learning (ML), disaggregated memory interconnects, as well as next-generation applications in sensors, 5G wireless, and aerospace.

Avicena raised USD 25 million in 2022 and USD 65 million in 2025, with investors including Samsung, Micron, and SK Hynix. Another Micro LED optical interconnect startup, Hyperlume, also completed a USD 12.5 million seed round earlier this year, with backing from Intel Capital—further signaling growing investor interest in this emerging niche.

To date, Avicena has established partnerships with LumiLeds and ams OSRAM to increase the production capacity of Micro LED arrays and advance mass production of optical interconnect Micro LED technology.

These developments indicate the gradual formation of a specialized ecosystem around Micro LED optical interconnects.

Recognizing the potential of Micro LED in non-display applications, companies within the LED industry has put eyes on new markets like optical communication. For instance, Ennostar has explicitly stated its commitment to building out the three core light source technologies needed for AI-driven optical communication: Micro LED, VCSEL, and InP. The company is optimistic about the potential of Micro LED in short-range (under 10 meters) optical transmission applications, with related products already co-developed with customers and currently in the sampling phase.

These industry movements highlight the rapid expansion of Micro LED from display to non-display domains. And the related industries are showing high growth potential, suggesting that initial scale may soon be achieved.

Taiwanese Manufacturers: Leveraging Micro LED to “Overtake via Lane Change”
Amid this wave of emerging Micro LED technologies, Taiwanese companies have moved quickly and aggressively, aiming to capitalize on their early involvement and technical capabilities to leapfrog traditional display technologies.

According to industry rumors, this is not TSMC’s first venture into Micro LED sector. It has long been speculated that TSMC is collaborating with Apple on AR devices, with Apple’s upcoming AR glasses expected to use Micro LED displays. If true, this would mean TSMC’s recognition of Micro LED’s promise in both display and optical communication applications.

Among display panel manufacturers, Taiwanese giants AUO and Innolux have chosen to focus their R&D and commercialization efforts on Micro LED, with relatively limited investment in OLED. Notably, they have largely stayed out of the large-size OLED segment. This contrasts sharply with aggressive OLED expansion by Korean and Chinese manufacturers.

The strategic choices made by Taiwanese firms reflect a calculated ambition for “lane-changing overtaking,” underpinned by deeper reasoning beyond market conditions alone:

OLED Market Landscape: Korean companies like Samsung Display and LGD have leveraged their first-mover advantage to build strong leads in OLED technology, patents, and capacity. Meanwhile, Chinese manufacturers have rapidly scaled up OLED production with government support, intensifying market competition and compressing profit margins. As latecomers, Taiwanese firms face significant challenges in catching up and generating returns in the OLED space

Taiwan’s Industrial Strengths: Taiwan boasts world-leading semiconductor manufacturing capabilities (with TSMC as a prime example) and has accumulated extensive expertise in precision engineering, automation, and LCD panel production (e.g., AUO and Innolux).

Micro LED’s Technical Fit: Key manufacturing processes for Micro LED—such as mass transfer, bonding, and inspection—are more closely aligned with semiconductor manufacturing (e.g., pick-and-place, photolithography, testing) than with OLED evaporation or LCD filling. This makes it easier for Taiwanese companies to leverage their existing strengths in semiconductors and precision manufacturing.

Given these factors, it is evident that Taiwanese manufacturers hope to seize leadership in next-generation display technologies—while standards and market structures remain fluid—by leveraging synergies between their display and semiconductor industries. Through differentiated competition, they aim to build high entry barriers and reshape their position and influence in the global display and broader technology ecosystems.

(Photo credit: Avicena)

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