Applied Optoelectronics (AAOI) is a leading, vertically integrated provider of fiber-optic networking products, primarily for four networking end-markets: internet data center, cable television, or CATV, fiber-to-the-home, or FTTH, and telecommunication, or telecom. The company design and manufacture a range of optical communications products at varying levels of integration, from components, subassemblies and modules to complete turn-key equipment.

In designing products for its customers, Applied Optoelectronics begins with the fundamental building blocks of lasers and laser components. From these foundational products, the company design and manufacture a wide range of products to meet its customers’ needs and specifications, and such products differ from each other by their end market, intended use and level of integration. The company  primarily focused on the higher-performance segments within all four of its target markets, which increasingly demand faster connectivity and innovation.

The four end markets the company targets are all driven by significant bandwidth demand fueled by the growth of network-connected devices, video traffic, cloud computing and online social networking. To address this increased bandwidth demand, CATV and telecommunications service providers are competing directly against each other by providing bundles of voice, video and data services to their subscribers and investing to enhance the capacity, reliability and capability of their networks. The trend of rising bandwidth consumption also impacts the internet data center market, as reflected in the shift to higher speed server connections. As a result of these trends, fiber-optic networking technology is becoming essential in all four of the company's target markets, as it is often the only economic way to deliver the desired bandwidth.

Applied Optoelectronics's vertically integrated manufacturing model provides it several advantages, including rapid product development, fast response times to customer requests and control over product quality and manufacturing costs. The company design, manufacture and integrate its own analog and digital lasers using a proprietary Molecular Beam Epitaxy, or MBE, and Metal Organic Chemical Vapor Deposition (MOCVD) fabrication process, which the company believe is unique in its industry. Applied Optoelectronics manufacture the majority of the laser chips and optical components that are used in its products. The lasers manufacture are proven to be reliable over time and highly tolerant of changes in temperature and humidity, making them well-suited to the CATV and FTTH markets where networking equipment is often installed outdoors.

Applied Optoelectronics have three manufacturing sites: Sugar Land, Texas, Ningbo, China and Taipei, Taiwan. The company have an additional research and development center in Lawrenceville, Georgia.  In its Sugar Land facility, it manufacture laser chips (utilizing its MBE process), subassemblies and components. The subassemblies are used in the manufacture of components by its other manufacturing facilities or sold to third parties as modules. The company manufacture laser chips only within its Sugar Land facility, where its laser design team is located. In its Taiwan location, The company manufacture optical components, such as its butterfly lasers, which incorporate laser chips, subassemblies and components manufactured within its U.S. facility. In addition, in its Taiwan location, The company manufacture transceivers for the internet data center, FTTH, telecom, and other markets. In The company China facility, The company take advantage of lower labor costs and manufacture certain more labor intensive components and optical equipment systems, such as optical subassemblies for the internet data center market, CATV transmitters (at the headend) and CATV outdoor equipment (at the node). Each manufacturing facility conducts testing on the components, modules or subsystems it manufactures and each such facility is certified to ISO 9001:2008. its facilities in Ningbo, China, Taipei, Taiwan, and Sugar Land, TX are all certified to ISO 14001:2004.

The company sales model focuses on direct engagement and close coordination with its customers to determine product design, qualifications, and performance through coordination of its sales, product engineering and manufacturing teams. Its strategy is to use its direct sales force to sell to key accounts within its markets, increasing product penetration within those customers while also growing its overall customer base in certain international and domestic markets. The company has direct sales personnel in each of its U.S., Taiwan and China locations focusing on a direct and local interaction with its internet data center, CATV, FTTH and telecom customers. Throughout its sales cycle, The company work closely with its customers to achieve design wins that The company believe provide long-lasting relationships and promote higher customer retention.