Market and Technology Trends

Co-Packaged Optics 2022 - Focus Data Centers

By Yole Intelligence — Mar 2022

Value of optics and ASIC co-packaging for DCs can reach $2B if technical challenges are solved.

Why is Co-Packaged Optics (CPO) such a hot topic today?

For the past 50 years, mobile bandwidth requirements have evolved from voice calls and texting to UHD video and a variety of AR/VR applications. Expanding IoT applications contribute in a major way to device and connectivity growth and push the expansion of data center infrastructure. Current form factors of pluggable optics are expected to be limited in their ability to support 1.6T and higher capacities in terms of the required electrical and optical densities, thermal issues, and power consumption. As a result of discrete electrical device implementation, power dissipation and thermal management are becoming limiting factors for future pluggable optics. CPO is a new approach that brings the optics and the switch ASIC close together and aims thereby to overcome the challenges. Furthermore, CPO technology is considered a new deployment model of the whole ecosystem and an alternative to pluggable optics. Revenue generated by the CPO market reached around $6M in 2020 and is expected to reach $2.2B in 2032 at a 65% Compound Annual Growth Rate for 2020-2032. This growth will be driven by substantial energy (>30%) and capital expenditure ($/Gbps) savings over pluggable optics.

What needs to fit together to make CPO mainstream?

The first full-scale deployment of CPO is anticipated in 2028 in a 200-terabit switching capacity. Multiple technological hurdles are expected to be solved by this time. The CPO technology will rely heavily on silicon photonics. With highly integrated optics and silicon chips, new engineering capabilities and foundries will be highly desired. Standardized electrical SerDes links for 224 Gb/s data rates to provide signaling over a multitude of link types are expected to be available. The progress on SerDes, from manufacturing yield improvements to reliability and serviceability, and a multivendor market model, might kick-start CPO’s desirability among end users. To satisfy the market demands and convince end-users of CPO viability, multivendor business models and manufacturing yield must be acceptable. Before this becomes a reality and CPO achieves real commercial status for intra-DC interconnects, it may gain more popularity in high-power computing rather than just displacing FPP. Despite the technological advantages of CPO, it will be hard to compete with pluggable modules, which will remain preferable for a long time yet.

The Optics industry awaits a difficult transformation

Today’s CPO industrials have formed around the merchant silicon and switch equipment vendors, which have acquired or partnered with innovative silicon photonics designers. They seek new ways to supply the DC operators with the CPO ecosystem. The vast majority of CPO-involved players were identified in the U.S., while traditional Chinese pluggable vendors have not introduced CPO technology into their roadmap yet. While the CPO market will be shaped to enable a multivendor business model, the pluggable optics industry may lead to consolidation, although CPO extrusion doesn’t come from those players. CPO technology will require new collaborations and the alignment of strategic partnering to address user requirements, technological feasibility, and economic viability. Proprietary CPO solutions will probably emerge first from Broadcom, Intel, Ranovus, and some others. The coming years should bring clarity to the CPO technical specification and the commercial and supply chain models.

Scope of the report 10
Companies cited in this report 14
Executive summary 17
Global context 55
- Global network IP traffic growth
- Evolution: Traffic vs Data processing vs. Per wavelength interface rate
- Macro-trends – Drivers
- Impact of COVID-19
- Fiber-Optic Communication (FOC) – Classification of technologies
- Pluggable optics evolution – Moving from copper to optics
Global trends in datacom 63
- Highlights
- Energy limiting factors
- Energy analysis – Total global electricity usage
- Network flattening trend – Impact of switch radix
- Fiber-to-the-Server – Simplify Networks
- Disaggregated design of DC
CPO market forecast 72
- Different evolution scenarios
- Overview
- Scenario’s assumptions – Comparison
- Optical transceiver revenue growth forecast by segment (2020 vs. 2026)
- Optical transceiver revenue growth forecast by Datacom application (2020 vs. 2026)
- DATACOM Optical Transceivers shipment forecast (2017-2026)
- DATACOM Optical Transceivers revenue forecast (2017-2026)
Main scenario – long term trends 79
Alternative scenario – long term trends 87
Scenario comparison 95
- CPO vs. Ethernet ($M and %)
- Conclusion
Co-packaged Optics (CPO) – What is it and why is it important 98
- What is Co-Packaged Optics (CPO)? – Overview
- Evolution from FPP
- Building blocks
- Different options
- Key trends
- Proof of concept for 25.6T assembly
- Who will be involved?
- When will it really happen? – Inflection point
- What needs to fit together in 2028?
- Timeline of CPO adoption along network architecture
- Conclusion
Other Co-packaged Optics applications 111
- Disaggregated server designs
- Impact of AI and ML capabilities on other market segments
- CPO applications for disaggregated computing
- Timeline of CPO adoption for different applications
Current status of faceplate pluggable optics – will it survive? 116
- Faceplate-pluggable model (FPP) – Partitioning concept
- Why does FPP dominate?
- Interoperability / Flexibility / Serviceability
- Pluggable optics evolution – Form factor – Trends
- Future pluggable module – 1.6T OSFP-XD
- Roadmap of future pluggable modules – Focus on 800G and 1.6T
- Pluggable optics evolution – Roadmap
- Roadmap of switch ASIC / Optical module / Faceplate density – Comparison
- Conclusion
The heart of modern DCs –Switch ASIC evolution 127
- Overview
- Roadmap
- Growth over time
- Switch box form factors
- Future
- Switch configuration at top 4 cloud operators
- Conclusion
Co-packaged Optics technology 135
- Beyond pluggable optics
- Technical specifications for the first-gen CPO transceiver module (guidance 2021)
- Representative implementations
- Lasers for CPO
- Materials for CPO
CPO industry 163
- Introduction
- Mapping of CPO ecosystem key players
- End users – DC operators
- M&As and partnerships
- Standardization
- Deployment models for FPP and CPO – comparison
- Supply chain – CPO platform – The different models in DATACOM
- Research
CPO challenges 184
- Design → Manufacturability → Reliability → Testability
- Serviceability and Business model
Final consideration 187
- Is the power consumption a real problem?
- Industry – USA vs. China: Race for Technology Leadership
Conclusion 200
Appendix 206
- Global trends in datacom – Network architecture
- Global challenges
- Faceplate Pluggable Optics – Ecosystem Challenges
- FPP’s Major Challenge – Energy efficiency

Key features:

Drivers of network traffic growth
Optical module evolution
Review of trends in data centers impacting the optical module market
Forecast for CPO market for 2017-2032
Comprehensive introduction to CPO
A quick look at the switch ASIC evolution
Analyses of integration and packaging aspects, including timelines
CPO industry analysis, including deployment models
Analysis of U.S. and China industrial landscape providing technology accessibility
CPO challenges that need to be overcome to succeed

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