POET Technologies Inc (NASDAQ:POET) shares are trading higher. The company on Monday announced plans to expand its capacity to meet AI infrastructure demand.

What Happened: Poet announced plans to expand its optical engine production capacity in Malaysia. The company signed a binding Memorandum of Understanding with Quanzhou Sanan Optical Communication Technology (SAIC). Under the terms, SAIC will transfer to Poet its 24.8% stake in the joint venture Super Photonics Xiamen, making Super Photonics a wholly owned subsidiary of Poet.

With control of Super Photonics Xiamen, Poet will gain the flexibility to implement its "China Plus One" strategy to locate its wafer-scale assembly operations outside of China.

Poet also said its been negotiating with several contract manufacturers in Malaysia to become the focal point for the company's wafer-scale assembly of optical engines. Poet expects to sign an agreement this month and to begin operations by the end of the year.

"The addition of wafer-scale equipment to our assembly and test operations will significantly expand our production capacity to cover the projected needs of our customers for 800G optical engines being sold to AI networks through 2026," said Suresh Venkatesan, chairman and CEO of Poet.

"We can now project an assembly and test capacity exceeding one million optical engines per year, all dedicated to the 800G and higher speed transceivers required for AI clusters."

Poet noted that definitive agreements related to the deal are expected to be signed by the end of November.

POET Price Action: Poet shares were up 5.49% at $4.23 at the time of publication, according to Benzinga Pro.

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