Despite TSMC estimating that the mass production of silicon photonic (SiPh) co-packaged optics (CPO) technology will still require more than one to one and a half years, the optical communication industry stated that recent developments in CPO have accelerated. A trial production line is set to begin small-scale shipments in 2025, potentially paving the way for CPO shipments to reach significant milestones in the second half of 2026.
The demand for data computation and transmission driven by artificial intelligence (AI) has surged, prompting the optical communication supply chain to collaboratively focus on key technologies related to SiPh CPO, which aims to overcome the speed limitations imposed by traditional copper wiring.
Industry insiders noted that the development of SiPh CPO involves extensive integration across multiple supply chains, with many variables affecting progress. However, TSMC's leadership remains the primary factor.
Recent market reports suggest that from late 2025 to early 2026, there is potential for small-scale shipments of 1.6T CPO modules, serving as an important declaration within the industry.
As small-scale validations are rapidly initiated in 2025, various optical communication companies are actively positioning themselves. If they can successfully take the lead, they will harness high growth momentum in the future AI landscape, making the competition in 2025 increasingly intense.
To address the challenges faced when traditional signal transmission speeds exceed 200G—where signal loss surpasses tolerable limits—the number of required copper cables would double, exacerbating power consumption and heat dissipation issues.
If Nvidia's next-generation Rubin platform enters the NVLink 6.0 specification phase, the total data transmission volume could potentially double, significantly increasing the necessity for CPO module implementation to resolve the transmission bottlenecks faced by AI servers.
Industry experts believe that the Rubin Ultra, expected to debut in 2027, will likely adopt these technologies, thus mass production of SiPh CPO was initially projected to start in 2027.
Recent reports indicate that among the three main structural components of CPO, TSMC will utilize its advanced packaging SoIC technology to integrate electronic integrated circuits (EIC) and photonic integrated circuits (PIC), employing silicon interposers for chip connections.
Manufacturing issues are expected to be largely resolved once verification is successful. Meanwhile, TSMC continues to play a leading role alongside its partners in developing external fiber array units (FAUs). However, as future mass production demands increase, outsourcing orders for backend processes will gradually be released.
FOCI anticipates small-scale shipments in 2025
Although the supply chain maintains a low profile regarding CPO progress, FOCI is viewed as one of TSMC's closest collaborators in developing CPO.
FOCI anticipates that related products for CPO fiber arrays will see small-scale shipments in 2025. The board has approved capital expenditures of NT$1.77 billion (approx. US$53.9 million) for 2025, aimed at acquiring equipment, cleanroom facilities, and next-generation technology R&D. Starting in 2026, data centers are expected to transition from existing pluggable fiber connections to the development of CPO-integrated optical engines.
FOCI possesses core technologies related to high-density, high-precision fiber array manufacturing, as well as precise alignment and packaging techniques for FAUs.
In the first three quarters of 2024, FOCI's revenue share from SiPh and CPO products is approximately 7%, a slight increase from 5% in 2023. Revenue primarily stems from non-recurring engineering (NRE) development, with the first trial production line expected to commence operations by the end of 2024, contributing some revenue from shipments in 2025.
Additionally, Browave, which holds a 4.55% stake in FOCI, is also involved in the EIC-PIC FAU bonding and fiber connection processes, with medium- to long-term prospects for entering external laser CPO testing procedures.
AuthenX reportedly to collaborate with major Japanese manufacturers on PIC development
AuthenX, a company invested by EZconn, is focusing on the development of PIC technology for SiPh CPO.
Through EZconn's connections, AuthenX has reportedly begun collaborating with major Japanese fiber module manufacturers, creating opportunities to reconnect with TSMC and Nvidia's supply chains in the future. Meanwhile, FAU remains a strong suit for EZconn, and small-scale shipments are anticipated in 2025.
Upstream epitaxial manufacturer LandMark Optoelectronics stands to benefit from robust SiPh shipments, with estimates suggesting first-quarter revenues in 2025 may reach NT$450 million, representing a quarter-over-quarter increase of 56%. Although January revenues were reported at NT$122 million, reflecting a year-over-year increase of 7.41%, achieving similar quarterly growth will require substantial performance boosts in February and March.
LandMark Optoelectronics stated that although data centers just began adopting 1.6T specifications in 2025, collaborations with several customers are underway to develop CPO products, but CPO is not expected to enter mass production in 2025. This is mainly due to CSP customers having concerns about the thermal tolerance and reliability of CPO. Even if small-scale shipments occur in 2025, it will take another one to two years of testing before mass production becomes feasible.