Co-Packaged Optics Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

The Co-packaged Optics Market size is estimated at USD 118.76 million in 2025, and is expected to reach USD 575.32 million by 2030, at a CAGR of 37.10% during the forecast period (2025-2030).

Co-packaged optics, an innovative technology, integrates optical components directly into a switch ASIC package. This integration addresses the bandwidth and power challenges of the next generation. By merging optics and electronics, co-packaged optics tackles issues like bandwidth density, communication latency, and power efficiency in today's data-driven networks.

This technology combines silicon and optics on a single substrate, aiming to reduce energy use and latency. It also rethinks strategies, like near-compute in CMOS layouts, by positioning essential communication components closer together for better efficiency.

Key Highlights

• Current-generation global networks and data centers, fueled by demands from high-resolution video streaming, virtual reality, the Internet of Things (IoT), high-performance computing (HPC), and advancements in artificial intelligence and machine learning (AI/ML), grapple with soaring demands. These include the need for heightened bandwidth, diminished latency, and reduced power consumption. In response, the industry is channeling investments into co-packaged optics (CPOs), signaling a new era of solutions crafted for the demands of emerging applications and the future's high-capacity networks. Furthermore, numerous companies are investing and forging collaborations with various consortiums, amplifying the market's potential.
• Broadcom highlights that co-packaged optics (CPO) represent a cutting-edge integration of optics and silicon on a unified substrate. This integration is pivotal in tackling the bandwidth and power challenges of the next generation. CPO synergizes expertise from fiber optics, digital signal processing (DSP), switch ASICs, and advanced packaging & testing. This collaboration promises significant value for data centers and cloud infrastructures. As investments in data centers surge and the demand for CPOs escalates, the market is poised for robust growth.
• Co-packaged optics (CPO) is poised to lead the way in communication, especially within the Silicon Photonics (SiPh) market. By shortening the electrical path, CPO conserves energy, minimizes heat generation, and boosts data transmission speeds. As silicon photonics evolves, numerous fabrication facilities and foundries are rolling out advanced passive and active devices, from modulators and photodetectors to lasers.
• The inherent complexity of networking within and between data centers remains a significant barrier to the widespread adoption of co-packaged optics. While co-packaged optics deliver high-bandwidth, low-power interconnects at the chip level, scaling these benefits to a full network architecture is a considerable challenge.
• Recent events, including the surging demand for cryptocurrencies, trade barriers between the US and China, and escalating geopolitical tensions, have underscored the complexities of the industry's globalized supply chains, leading to production delays and shortages. This reliance on a limited number of players within the semiconductor supply chain introduces significant risks; even minor disruptions can yield extensive repercussions. Heightened geopolitical tensions are prompting nations to diversify their sourcing capabilities. Additionally, fluctuations in silicon prices, influenced by various trade scenarios, are anticipated to impact the market.

Co-packaged Optics Market Trends

1.6 T Data Rates Segment to Hold Significant Market Share

• Engineers face a pivotal decision to opt for the more conventional 1.2T and settle for modest networking enhancements or push the envelope with 1.6T, pioneering another optical milestone, truly addressing networking needs. Ciena Corporation reveals that the 200GBaud 1.6T not only doubles the coverage of the 800G but also does so with 25% fewer transceivers, leading to a quarter of energy savings.
• The forthcoming generation of coherent optics is set to seamlessly integrate with next-gen routing data paths at 800G, ensuring widespread 800G connectivity. The 1.6 Tb/s (terabits per second) stands out as the prime candidate, adeptly accommodating any blend of 400G and 800G rates and fully supporting multiples of 800G. The ~200Gbaud 1.6T is essential for universal 800G connectivity. This trend underscores the industry's pivot towards the 1.6 Terabit solution to cater to escalating demands.
• In September 2024, Source Photonics unveiled its 1.6T and 800G optical modules, active optical cables (AOC), and direct attach cables (DAC), all leveraging the advanced single-lambda 200G PAM4 (Pulse Amplitude Modulation 4-Level) technology. The lineup also features the 800G 4×200G DR4 (Data Rate 4)/FR4 (Forward Error Correction 4)/LR4 (Long Reach 4) modules and the versatile 400G/800G optical modules, all designed to support immersion liquid cooling.
• Source Photonics’ newly introduced 1.6T series boasts the DR8 (Data Rate 8), 2xFR4 optical modules, and DAC/ACC (Active Copper Cable) copper cables. The 800G lineup is expansive, featuring SR8 (Short Reach 8), DR8, and 2xFR4 modules based on single-lambda 100G, alongside DR4, FR4, and LR4 modules leveraging single-lambda 200G.
• Additionally, the series includes DAC, ACC, and active electrical cables (AEC) copper cables, all elegantly packaged in OSFP (Octal Small Form-factor Pluggable) or QSFP-DD (Quad Small Form-factor Pluggable Double Density) form factors, ensuring a diverse range of optical connectors and interface options.
• In summary, as AI infrastructure investments surge, they are catalyzing the evolution of advanced optical connectivity solutions. Innovations in the 1.6 T segment not only cater to the unique demands of AI clusters but also address challenges related to cost and power consumption.

Asia Pacific Expected to Witness Significant Growth

• Asia Pacific is poised to emerge as the fastest-growing region in the coming years, spurred by swift advancements in data centers, telecommunications, and high-performance computing. In this digital age, domestic cloud service providers (CSPs) in China, especially Alibaba Cloud and Tencent Cloud, are crucially driving the adoption of co-packaged optics (COPs). Countries like China, India, Japan, and Korea are making significant investments to enhance digital technologies across various sectors. These unified efforts are set to substantially elevate the adoption of COPs, propelling the market's growth.
• According to the India Brand Equity Foundation (IBEF), India is evolving from an emerging market to a developed economy, with advanced technology at the forefront of this transformation. Forecasts suggest that by 2047, India could ascend to the status of an economic superpower, targeting a GDP of USD 26 trillion. Given India's vast digital populace and the rapid growth of its digital economy, there's an imperative need for a broader network of data centers.
• In India, cloud computing has evolved from a mere operational tool to a catalyst, driving innovation, flexibility, and corporate expansion. In response to the burgeoning demand for high-performance computing (HPC) solutions, many companies are making significant investments in the country.
• In December 2024, Ace Cloud Hosting, a subsidiary of Real-Time Data Services (RTDS) Group, launched a new cloud region in Noida, India, in collaboration with industry leaders NetApp and Quantum. Established as a Tier IV data center, the initiative aims to provide low-latency access to cutting-edge cloud technologies. AceCloud underscores that this new facility will be equipped with specialized hardware for AI and HPC tasks, including cloud GPUs and storage optimized for high Input/Output Operations Per Second (IOPS). The partnership with NetApp and Quantum, as emphasized by the company, establishes a solid groundwork, delivering innovative solutions that enhance performance and stimulate growth, creating demand for co-packaged optics in the country.
• Moreover, in November 2024, Thailand's Board of Investment (BOI) sanctioned investments amounting to 66.2 billion baht (USD 1.96 billion) for fresh data center initiatives in Chonburi Province. These ventures are supported by tech behemoths Google and China's GDS. The BOI's recent announcement spotlighted a notable endorsement: a Thai Baht (THB) 32.8 billion investment from Quartz Computing, a subsidiary of Alphabet, Google's parent entity, targeting a hyperscale data center in Chonburi. Such high investments are creating growth opportunities for co-packaged optics in the region.

Co-packaged Optics Industry Overview

The Co-packaged optics market, dominated by major players like Ayar Labs Inc., Broadcom Inc., Cisco Systems Inc., IBM Corporation, Intel Corporation, and Microsoft Corporation, showcases a competitive landscape where firms vie for dominance through pricing, product offerings, and market share.

While major companies steer the market with their R&D and consolidation moves, the landscape is marked by deep market penetration and rising fragmentation. Innovation is the key to a sustainable competitive edge, with incumbents leaning on product differentiation and market expansion strategies.

Brand identity plays a pivotal role in the market dynamics. Established brands, synonymous with superior solutions, enjoy a competitive edge bolstered by their access to distribution channels, business relations, and innovative platforms.

Top players boasting of long-standing market credibility benefit from robust supplier-distribution ties and high market penetration. They're also zeroing in on lucrative industries, like hyperscalers, which present fresh applications for co-packaged optics.

These key market players wield significant influence, underscoring the heightened intensity of competitive rivalry.

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