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Co-Packaged Optics for Data Centers 2026

CPO redefines AI interconnect economics, growing to $112B by 2031 as value shifts to packaging and lasers.

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The data center interconnect industry faces its biggest structural shift in 40 years, as AI clusters push optics onto the package - co-packaged optics (CPO) reshaping a market that scales toward ~$112B by 2031.

What’s new in this edition?
  • Completely new market model: This edition introduces a completely new market model covering switches and optical engines for scale-out and scale-up, plus optical engines for XPU packages. Demand is built bottom-up: every GPU and AI-ASIC package shipped each year carries a per-package intensity of bandwidth and optical engines (OEs), summed across chip generations for a granular, defensible forecast. NVIDIA coefficients are derived from published rack parameters, while non-NVIDIA volumes are built from architecture archetypes, and units multiplied by ASP drive revenue. 
  • Two new BoM analyses:  two brand-new bill-of-materials analyses covering the CPO switch and the optical engine, alongside a dedicated teardown of the ELSFP module. Each analysis breaks down component costs and suppliers, giving customers a clear view of where cost and value sit inside next-generation CPO systems.
  • Structural update: A refreshed structural chapter delivers qualitative analysis of scale-in, scale-up, and scale-out architectures, clarifying how each approach addresses bandwidth, power, and thermal constraints. This helps customers benchmark competing system architectures and anticipate which topology will win in different deployment scenarios.
  • Detailed roadmap to market: A newly detailed roadmap maps technology and application timing across the CPO landscape, identifying who ships what and when. Customers can use this roadmap to time their own product launches and investment decisions against the pace of the broader ecosystem.
  • Updated ecosystem mapping: The ecosystem mapping has been substantially expanded with finer granularity on ASIC/XPU vendors, fiber array unit (FAU) suppliers, light source providers, and test and assembly partners. This gives customers a more precise view of where every player sits in the CPO supply chain.
  • Value migration: A new analysis tracks where value migrates as optics move onto the package, highlighting which players stand to gain and which risk losing share as the industry shifts from pluggable to co-packaged optics. This is essential reading for any company repositioning its roadmap around CPO.
  • Strategic capital movement: This edition tracks strategic capital movement from recent fundraising rounds and investments across the CPO value chain, revealing which companies and technologies are attracting the most investor attention. Customers can use this intelligence to benchmark their own strategic positioning.
  • CPO ecosystem capital flows: A dedicated new section examines the CPO ecosystem's fundraising wave and acquisition wave side by side, showing exactly where capital is flowing across the supply chain. It is a must-read for investors and strategy teams tracking consolidation and competitive dynamics in real time.
  • CPO reliability: A new chapter dedicated to CPO reliability addresses one of the industry's most pressing adoption concerns, covering the technical and qualification challenges that must be solved before co-packaged optics can scale in production. This gives customers the risk context needed to plan deployment timelines with confidence.
  • Extended laser sources chapter: The laser sources chapter has been significantly extended, providing deeper analysis of the light source technologies and suppliers competing to serve CPO architectures. This expanded coverage helps customers evaluate sourcing options as the laser landscape evolves alongside CPO adoption.
  • Fiber Array Units (FAUs) for CPO: A brand new chapter delivers qualitative and industrial analysis of Fiber Array Units (FAUs) for CPO, covering the manufacturing processes, suppliers, and technical challenges unique to this critical component. This gives customers a comprehensive view of a part of the value chain that has received little dedicated coverage until now.

Objectives of this report

  • Provide a detailed analysis and comprehensive view of co-packaged optics (CPO) for data centers.
  • Provide the context of why DC operators explore CPO technology
    • The explosive growth of AI, particularly large language models (LLMs) and generative AI as a major market driver, and other trends in data centers impacting the optical module technology, market, and industry
  • Provide detailed market forecasts from 2021 – 2031, split by applications – scale-out and scale-up:
    • CPO switches
    • CPO optical engines
    • ELS modules
  • Review the supply chain
    • Industrial ecosystem, supply chain of selected players
    • Who truly stands to benefit from CPO transformative approach?
    • Where capital is going?
  • Examine technology approaches for CPO
    • Applications: scale-out networking & scale-up AI/ML high-performance computing
    • CPO technology architectures: optical engines for scale-out and scale-up
    • Roadmaps for CPO adoption
    • Competitive landscape - Technical parameters
    • CPO solutions comparison
      • CPO market leaders & merchant silicon
      • Optical I/O specialists (start-ups)
  • Discuss CPO challenges and compare with pluggable optics

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