Co-packaged Optics

An advanced packaging technology that integrates optics and silicon electronics on a single substrate to boost data speeds.

Co-packaged Optics (CPO) is an advanced packaging technology that integrates optical transceivers directly onto the same multi-chip substrate as the main silicon switch or processor. By placing the optical components and the electronic integrated circuits (ASICs) in extremely close proximity, CPO minimizes the physical distance that high-speed electrical signals must travel. This design drastically reduces power consumption, lowers signal latency, and increases overall data transmission bandwidth compared to traditional pluggable optical transceivers. In typical networking setups, electrical signals travel from the processor across a printed circuit board to pluggable optical modules at the edge of the chassis. As data center speeds scale to 51.2 Tbps and beyond to support artificial intelligence and high-performance computing, the electrical losses over these copper board traces become unsustainably high. CPO solves this bottleneck by using silicon photonics to convert electrical signals to optical signals right next to the processor, allowing light to carry the data the rest of the way. For technology and semiconductor investors, CPO represents a major paradigm shift in data center architecture. Companies that successfully commercialize CPO stand to capture significant market share as hyperscalers upgrade their infrastructure to handle massive AI workloads. However, investors should watch for adoption barriers, such as high manufacturing complexity, thermal management challenges, and the difficulty of replacing a single failed optical component when it is permanently co-packaged with an expensive processor.

A data center operator evaluates upgrading a network switch from traditional pluggable optics to Co-packaged Optics (CPO). The traditional switch requires 30 watts of power per 800G optical transceiver module to drive electrical signals across the circuit board. By switching to a CPO architecture, the physical distance between the switch ASIC and the optical engine is reduced to millimeters, lowering the power required to drive the electrical interface to just 12 watts per 800G link. This represents a 60% reduction in interface power consumption (30W down to 12W) for the data center operator.