BOSTON (February 27, 2025) – Co-Packaged Optics (CPO) is slowly moving to real deployment, catalyzed by the explosion in AI bandwidth and connectivity requirements. According to the latest Active Insight report from research firm Cignal AI, large-scale CPO deployment is not expected for 3-5 years, but some initial deployments will start in 2026.
Technical and manufacturing challenges are hindering high volume CPO for the moment, but its adoption is inevitable for specific applications. Initial volume deployments will be proprietary and will prioritize innovation before standardization. These deployments will originate at large hyperscalers and Nvidia which have the scale and vertical integration to take on the sizable technical risks.
“The industry recognizes CPO’s undeniable benefits, but the technology is still not competitive with pluggable optics which are working well,” says Scott Wilkinson, Lead Analyst at Cignal AI. “There are positive signs for CPO deployment by 2026, but large-scale deployments will require investment by motivated industry actors like hyperscalers or Nvidia.”
Key Findings from the Co-Packaged Optics (CPO) Market Report:
- Successful CPO deployments will initially be proprietary, allowing for innovation before standardization.
- Large switching applications (scale-out) such as Broadcom’s Bailey are not compelling when compared to pluggable optics at current speeds and may need to wait for the 400G/lane generation for mass adoption.
- CPO’s main application is within the scale-up AI networks, where it allows for greater connectivity and distance than copper. As AI nodes expand, the initial high-volume deployments will start in the scale-up network as an alternative to copper before migrating to the scale-out network.
- CPO’s impact on pluggable optics will be minimal at first, as the first volume applications will replace copper. Once proven in volume with this application, CPO will cannibalize pluggables in scale-out applications.
About the Report
The Co-Packaged Optics (CPO) Market Report is part of Cignal AI’s Active Insight research service. The report reviews CPO technology and applications, the relative benefits and issues, its impact on pluggable optics, and Cignal AI’s expectations for CPO’s future. The report provides detailed information about CPO Technology, Silicon Photonics, ELSFP, Chip-to-Chip Interconnect, Co-Packaging, and more. For a complete table of contents, please refer to the full report.
Active Insight market reports deliver real-time reporting on crucial developments in the optical market. This includes detailed analysis of technology trends, show reports, and in-depth vendor analysis. These reports are included with subscriptions to Cignal AI’s Transport Hardware Report and Optical Component Report, but are also available for purchase individually with unlimited analyst inquiry. The archive of reports is available, and purchasing inquiries can be directed to [email protected].
About Cignal AI
Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.
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