Huatai Securities says AI compute expansion will increase optical-module power consumption, shifting aluminum nitride (AlN) — prized for high thermal conductivity, electrical insulation and thermal compatibility — from an optional to a likely required material. Huatai estimates optical modules could drive demand for high-end AlN powder to exceed 2,000 tonnes by 2027. On the supply side, Japanese suppliers are facing raw-material shortages tied to rare-earth controls, and tight downstream demand

Huatai Securities says AI compute expansion will increase optical-module power consumption, shifting aluminum nitride (AlN) — prized for high thermal conductivity, electrical insulation and thermal compatibility — from an optional to a likely required material. Huatai estimates optical modules could drive demand for high-end AlN powder to exceed 2,000 tonnes by 2027. On the supply side, Japanese suppliers are facing raw-material shortages tied to rare-earth controls, and tight downstream demand could create a supply shortfall and upward pressure on prices. Domestic manufacturers are accelerating capacity ramp-up and customer qualification, presenting a potential domestic-replacement opportunity.