POET Technologies (PTK.V and NASDAQ: POET) was at last look up 1.3% in US premarket trading on Monday after saying it will expand its optical engine production capacity in Malaysia.

The company also announced that it has signed a binding memorandum of understanding with Quanzhou Sanan Optical Communication Technology to transfer to POET its 25% stake in the joint venture Super Photonics Xiamen, along with all the production equipment previously leased by SAIC to SPX. With control of SPX, POET said it now has the flexibility to implement its 'China Plus One' strategy to locate its wafer-scale assembly operations outside of China.

Concurrently, the company said it has been negotiating with several contract manufacturers in Malaysia to become the focal point for POET's wafer-scale assembly of optical engines and expects to sign an agreement this month and to start 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 Dr. Suresh Venkatesan, Chairman & Chief Executive Officer of POET, in a statement. "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."

Monday's statement noted the 25% equity stake represents SAIC's entire ownership position in the JV. With no other shareholders, SPX will become a wholly owned subsidiary of POET and will continue to assemble optical engines for sale in China, adopting the POET company name. The MOU is binding and is also subject to definitive agreements, which are expected to be signed by the end of November.

Poet saw its shares ease $0.03 to $5.60 in Canada trade on Friday.