The Quiet Deal Powering the Future of AI Connectivity

SAN JOSE, CA – November 24, 2025 – A recent press release announced a quiet, confidential agreement. Credo Technology Group, an innovator in high-speed connectivity silicon, has licensed its patents for Active Electrical Cable (AEC) technology to The Siemon Company, a 122-year-old global leader in network infrastructure. The joint statement was brief and corporate: “We are pleased to have reached a license agreement.” On the surface, it’s a simple transaction between two companies in the arcane world of data center hardware. But beyond the launch, this deal is far more significant. It’s a strategic maneuver that illuminates the critical, and often invisible, infrastructure layer that will determine the speed, efficiency, and scalability of the artificial intelligence revolution.

This isn't just about cables; it’s about enabling the colossal data demands of AI clusters and hyperscale data centers. As industries race to deploy generative AI and complex machine learning models, the underlying plumbing is being pushed to its limits. This partnership between a silicon visionary and an infrastructure titan offers a blueprint for how the industry is solving its biggest bottlenecks, one high-speed link at a time.

The Rise of the Active Electrical Cable

To understand the impact of this deal, one must first understand the technology at its heart: the Active Electrical Cable. For years, data centers have relied on two primary options for short-distance connections inside server racks: passive copper cables (Direct Attach Cables, or DACs) and fiber optic cables (Active Optical Cables, or AOCs). DACs are inexpensive and reliable but lose signal integrity quickly, limiting their reach to just a few meters at the blazing speeds required by modern AI processors. AOCs can go much further but are significantly more expensive and power-hungry.

Enter the AEC, a strategic middle ground that is rapidly becoming indispensable. AECs look like their passive copper cousins but contain tiny, integrated circuits—retimers and digital signal processors (DSPs)—that actively boost and clean the signal. This allows them to transmit data reliably over longer distances of 5 to 7 meters, a crucial length for connecting rows of servers and switches in sprawling AI pods. They achieve this while consuming less power and costing less than their optical counterparts.

The market is responding with explosive force. Industry analysts project the AEC market, valued at just over a billion dollars in 2023, could surge to nearly $3 billion by 2028, with some forecasts predicting a compound annual growth rate of 45%. This growth isn’t speculative; it’s driven by the non-negotiable demands of AI hardware. As data rates climb from 400G to 800G and soon 1.6T (terabits per second), the physics of passive copper simply breaks down, making active solutions a necessity, not a luxury.

Credo's Intellectual Property Power Play

At the epicenter of this shift is Credo. The company has established a commanding position in the AEC market, with some analysts estimating it holds as much as 85% of the market share. Its success is built on proprietary Serializer/Deserializer (SerDes) and DSP technologies that are the “brains” inside the cable, enabling best-in-class performance, reach, and energy efficiency. While Credo is a vertically integrated manufacturer producing its own line of HiWire AECs, its business model is more nuanced.

This licensing deal with Siemon is a masterclass in leveraging intellectual property (IP). Instead of solely competing by selling its own finished products, Credo is also monetizing its core innovation by licensing it to other established players. This strategy accomplishes several goals. First, it creates a high-margin, recurring revenue stream that complements its product sales. Second, and more importantly, it cements Credo’s technology as an industry standard. By allowing a respected giant like Siemon to build products using its patented designs, Credo accelerates the adoption and validation of its IP across the entire ecosystem.

This move is less about giving a competitor a leg up and more about expanding the size of the entire playing field. With AI infrastructure build-outs happening at a breakneck pace, the demand for high-performance interconnects is immense. By licensing its foundational technology, Credo ensures its innovations are embedded in a wider array of solutions, solidifying its role as a key enabler of the next generation of computing, whether the final cable assembly has a Credo logo on it or not.

Siemon's Strategic Upgrade for the AI Era

For The Siemon Company, this agreement is a forward-looking move to secure its legacy of leadership. Founded in 1903, Siemon has navigated over a century of technological change by consistently providing high-quality, reliable infrastructure. While the company already has a portfolio of high-speed cables, including its own AECs, the race to support AI workloads requires staying on the absolute cutting edge.

By licensing Credo’s market-leading IP, Siemon gains immediate access to validated, state-of-the-art technology without the immense R&D investment and time required to develop it from scratch. This allows the company to enhance its product offerings, potentially improving the reach, signal integrity, and power efficiency of its AECs to meet the stringent demands of customers building out AI clusters. In a market where competitors include heavyweights like Amphenol, TE Connectivity, and Molex, this access to superior silicon-level IP provides a significant competitive advantage.

This partnership allows Siemon to strengthen its value proposition to data center operators and network architects, assuring them that Siemon’s solutions are not just reliable but are powered by the industry’s foremost technology. It’s a classic symbiotic relationship: Siemon brings its global manufacturing scale, extensive distribution channels, and deep customer relationships, while Credo provides the underlying technological engine. The result is a powerful combination that can deliver advanced solutions to the market faster and more broadly.

A Blueprint for Industry Collaboration

Ultimately, the Credo-Siemon deal is emblematic of a larger trend shaping the tech industry: the growing necessity of deep collaboration to solve complex problems. The days when a single company could master every layer of the technology stack, from silicon design to final system integration, are fading. The sheer complexity and specialization required to push the boundaries of performance in areas like high-speed networking demand an ecosystem approach.

This partnership model—a silicon IP specialist joining forces with an established infrastructure manufacturer—is becoming a blueprint for innovation. It acknowledges that the genius of a breakthrough chip is only realized when it is successfully integrated into a robust, scalable, and manufacturable system that can be deployed globally. These behind-the-scenes alliances, often shielded from public view by confidential terms, are the invisible gears driving the digital world forward.

As AI continues its relentless march, the demand for faster, smarter, and more efficient data transmission will only intensify. The future will be built not just by the companies making headlines with new AI models, but by the crucial, strategic partnerships between innovators like Credo and infrastructure leaders like Siemon, who are quietly laying the foundational pathways for data to travel.