Linear Pluggable Optics

An optical transceiver design that removes the digital signal processor (DSP) to reduce power consumption, latency, and cost.

Linear Pluggable Optics (LPO) is an emerging technology in high-speed data center networking. Traditional optical transceivers rely on an internal Digital Signal Processor (DSP) chip to clean up, amplify, and reconstruct electrical signals. LPO modules eliminate this power-hungry DSP, relying instead on high-performance analog components inside the transceiver and the host switch's internal silicon to manage signal integrity. For investors, LPO is a key technology to watch because it offers a lower-cost, lower-latency, and highly energy-efficient alternative to standard transceivers. Power consumption is a major bottleneck in modern artificial intelligence (AI) data centers, and removing the DSP can reduce transceiver power consumption by up to 50% while significantly lowering hardware costs. However, investors should be aware of the trade-offs and risks. Because LPO lacks a DSP to clean up signals, it requires precise system integration and has shorter transmission distance limits than DSP-based modules. This makes it highly suitable for short-reach connections inside AI clusters, but less viable for long-distance telecom networks. It also faces competition from other emerging architectures like Co-Packaged Optics.

A data center operator deploys 100,000 optical transceiver modules. Standard DSP-based transceivers consume 16 Watts of power each, while LPO modules consume only 8 Watts each. By switching to LPO, the operator reduces transceiver power consumption from 1,600,000 Watts (1.6 MW) to 800,000 Watts (0.8 MW), saving 800 kW of continuous power and lowering electricity costs.