Why Emerging Data Centers Need NEM-Alternative Optics

Driven by major investment and new initiatives, the data center boom shows no sign of slowing. In March 2026 for example, the European Union (EU) announced plans to build over a thousand new data centers¹, primarily motivated by the sheer demand for Artificial Intelligence (AI) services across the continent and beyond. However, this demand has triggered a speed-to-power like race that traditional power grids cannot currently match.

Power supply has now overtaken capital and land to become the single biggest gating item for global data center development. Major hubs including Frankfurt, London, Amsterdam, Paris, and Dublin (FLAP-D) are facing severe grid capacity issues to support new facilities, with vacancy in these cities having collapsed to a record low of 6.3% by the end of 2025². This challenge is forcing developers and hyperscalers to look further afield and accelerate buildouts in emerging regions.

The New Secondary Regions

Currently, the developing markets attracting hyperscalers include – most notably – Madrid, Milan, and Warsaw³. Now considered Europe’s main secondary markets due to their greater availability of power and space, these regions also boast an abundance of renewable energy, and benefit from faster regulatory approvals. Low-latency requirements are also a primary driver, especially as cloud providers seek to position infrastructure closer to end users to improve application performance.

However, these rapid buildouts are already exposing the gaps within supply chain depth and the availability of high-performance networking infrastructure. Without the correct optics, operators experience lower interconnection density and fewer established carrier ecosystems, which introduce latency and limit the efficiency of AI workloads at scale. Additionally, increased exposure to ongoing global component constraints has already accelerated lead times, which subsequently has driven up deployment costs.

In such a volatile time, cost control and resource optimization is paramount. Yet, with Dynamic Random Access Memory (DRAM) prices remaining structurally elevated⁴, these new markets face a disproportionate challenge in balancing aggressive expansion targets against the rising cost of memory-intensive AI infrastructure.

The DRAM Bottleneck

With DDR5 prices surging by over 300%⁵ between October to December 2025 alone, the shortage of DRAM has evolved from a procurement issue into a pure structural constraint. The massive computing requirements of AI, including the training and running of complex Large Language Models (LLMs), process vast datasets instantly. DRAM - particularly High Bandwidth Memory (HBM) used in advanced AI accelerators – typically forms the high-speed memory foundation to increase the efficiency of this training.

To ensure uninterrupted inference performance and eliminate system bottlenecks, hyperscalers and server Original Equipment Manufacturers (OEMs) have exhausted the available DRAM supply. This has created an instant problem for emerging markets that lack the purchasing power and supplier prioritization which high hyperscaler concentrations hold, increasing their exposure to extortionate costs and access delays.

This is only compounded by sovereign data demands⁶, particularly in the EU. Legislation such as the EU Data Act⁷ is ensuring that locally hosted services aren’t open to foreign access. Operators within these regions must comply with strict regional data governance requirements while building infrastructure without access to hyperscaler-level procurement scale. This is compelling decisionmakers to source more cost-efficient, interoperable optics that can be deployed without adding complexity or vendor dependency.

How AddOn Fits the Bill

As a Network Equipment Manufacturer (NEM) alternative provider, AddOn Networks addresses one of the biggest challenges facing emerging data center markets: balancing rapid infrastructure expansion with tight cost controls. Our optics provide interoperability across major switch and networking vendors, enabling operators to integrate new capacity without being locked into proprietary ecosystems or expensive upgrade cycles. For those concerned with sovereignty, data never leaves jurisdictionally controlled networks with these optics, granting operators full oversight over their pathways.

Our range of transceivers and optics solutions are primed to deliver the necessary network performance but at around 70% of the cost of NEM optics for those within emerging markets. This includes the recent expansion to 1.6T⁸, which are supporting operators overcome increasingly bandwidth-intensive AI workloads. Today, they have a practical pathway to scale high-performance infrastructure while maintaining flexibility.

Beyond performance and cost advantages, solutions from AddOn Networks also guarantee long-term trust through compliance-focused deployment support and our anti-competitive behavior warranty. Customers can therefore retain full freedom to choose, upgrade, and scale their infrastructure without being tied to restrictive vendor practices.

Equipping New Markets

With other regions including the Nordics⁹ gearing up for a data center gold rush over the next five years, NEM-alternative optics from AddOn Networks will no doubt prove ever present in bringing cost-effective, interoperable means of scaling AI workloads to these emerging markets.