Sugar Land announced it is providing $2M in incentives for an internet-powering product manufacturer to expand in the city.

Applied Optoelectronics Inc. will occupy a new 210K SF facility made for manufacturing optical transceivers for artificial intelligence-focused data centers and will add a new manufacturing line to its existing headquarters, both in Sugar Land.

AOI’s expansion is a capital investment of more than $150M that will create more than 500 new jobs in the city over the next five years, according to a press release.

The city of Sugar Land Office of Economic Development, with assistance from Fort Bend County, struck a 10-year agreement with AOI to provide the $2M incentive package. The development will onshore part of AOI’s international manufacturing, which occurs at its facilities in Taiwan and China.

AOI was founded at the University of Houston in 1997 and opened its headquarters in Sugar Land with 35 employees around the same time. It has grown to employ nearly 450 people in the city. The company makes products that power the internet, including lasers, components, modules and equipment used in data centers and residences.

“AOI builds infrastructure that powers the most advanced computing systems in the largest data centers in the world,” Stefan Murry, AOI’s chief financial and strategy officer, said in the release. “We are committed to growing our roots and expanding our U.S.-based production capabilities here in Sugar Land.”

AOI’s headquarters is at 13139 Jess Pirtle Blvd. in the 1,000-acre Sugar Land Business Park, where it occupies 139K SF, the Houston Business Journal reported. The new manufacturing facility, expected to be operational by summer 2026, will be at an unspecified location nearby.

Also in Sugar Land this summer, third-party logistics company Texas Logistic & Fulfillment Services leased a 300K SF building formerly occupied by Amazon.