The commercial inflection point for CPO technology has arrived—NVIDIA and Broadcom have successively begun mass production of their flagship switches, delivering higher bandwidth while reducing power consumption by up to 70%. Industry giants such as Meta have already completed deployment validation. However, the convergence of three challenges—the low yield of optical engines, silicon photonics capacity constraints, and competition for advanced packaging resources—casts doubt on whether the anticipated volume ramp-up window between 2027 and 2028 will materialize. Vertical integration has become the decisive factor: whoever controls the core supply chain secures a ticket to the next round of competition.
Co-packaged optics (CPO) technology has reached a commercial inflection point, but the supply capacity of core components will determine the trajectory of market dynamics.
According to TrendForce Consulting, $NVIDIA (NVDA.US)$ its next-generation Spectrum-X CPO switch has begun shipping to select partners, $Broadcom (AVGO.US)$ and the 51.2T Bailly CPO switch continues to ship in limited volumes, marking the official entry of co-packaged optics (CPO) technology into mass production. This technological breakthrough represents a critical step forward in building next-generation high-bandwidth data center infrastructure.
However, the onset of mass production does not eliminate supply bottlenecks. TrendForce notes that the availability of core components—such as optical engines, silicon photonics chips, and advanced packaging—will be a key variable constraining the ramp-up pace of CPO switch production and will directly shape competitive dynamics among industry players during the anticipated market expansion window of 2027–2028.
In response to supply chain pressures, leading firms such as NVIDIA and Google have adopted differentiated strategies, with vertical integration becoming increasingly pronounced. Companies capable of securing control over core resources are poised to gain a strategic advantage in the next phase of competition.
Launch of two flagship products accelerates CPO commercialization
The NVIDIA Spectrum-X CPO switch was co-developed by NVIDIA and Taiwan Semiconductor using the COUPE advanced packaging process, delivering 400 Tb/s of processing capacity. TrendForce forecasts that its production capacity will further expand in the second half of 2026.
Broadcom’s 51.2T Bailly CPO switch is being brought into volume production with support from partners Delta Electronics and Micas Networks. Compared with traditional pluggable optical transceivers, this product reduces power consumption by up to 70%. Hyperscale cloud providers such as Meta have already completed deployment validation, confirming its initial feasibility in real-world data center environments.
By integrating optical components adjacent to the switch ASIC, CPO technology significantly boosts bandwidth while reducing power consumption, positioning it as a core development direction for next-generation high-bandwidth switches. The concurrent launch of these two flagship products signals CPO’s transition from technical validation to large-scale commercialization.
Triple bottlenecks impose structural pressure on supply chain scaling
Despite the commencement of mass production, TrendForce observes three core constraints facing the CPO switch supply chain.
First is the optical engine segment. Optical engines must integrate multiple components such as lasers and modulators, involving highly complex manufacturing processes with extremely stringent yield requirements. Compounded by thermal management challenges, only a limited number of suppliers currently possess mass production capabilities, resulting in severely constrained supply elasticity.
Second, silicon photonics capacity expansion entails a lengthy lead time. Silicon photonics wafer foundry services and back-end packaging demand exceptional precision and reliability, making it impossible to rapidly scale capacity in the short term to meet surging demand, thereby creating structural constraints on the supply side.
Third, competition for advanced packaging capacity is intensifying. CPO switches have become significantly more reliant on advanced packaging processes such as COUPE; however, AI chips and high-performance computing (HPC) applications are simultaneously competing for the same packaging resources, continuously squeezing CPO supply chain capacity. The compounding effect of these three bottlenecks introduces considerable uncertainty into the production ramp-up timeline for CPO switches.
Leading players are adopting divergent strategies, with vertical integration becoming the new norm.
In response to supply chain pressures, leading vendors are pursuing markedly different approaches. Some cloud hyperscalers have opted to secure supply through long-term procurement agreements and are making strategic investments in upstream silicon photonics suppliers to gain early access to critical resources. NVIDIA, meanwhile, has deepened its collaboration with Taiwan Semiconductor, which controls advanced packaging capacity, to advance its vertical integration strategy. Companies like Google are accelerating in-house development of optical components to reduce reliance on external suppliers.
TrendForce expects vertical integration to become the industry’s new norm. Vendors capable of independently controlling silicon photonics design, optical engine manufacturing, and advanced packaging resources will gain a competitive edge during the 2027–2028 volume ramp-up phase of the CPO switch market, whereas those dependent on external sourcing may face heightened cost pressures and delivery risks during periods of supply tightness.
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