Co-Packaged Optics Market

Market Definition

Co-packaged optics (CPO) is a technology that integrates optical and electronic components within a single package to reduce power consumption and latency in data transmission. The market includes components, modules, and solutions designed for high-speed, energy-efficient data communication.

It is widely applied in data centers and high-performance computing environments to enable faster data transfer, optimize bandwidth usage, and support the growing demand for scalable, low-power network infrastructures.

Co-Packaged Optics Market Overview

The global co-packaged optics market size was valued at USD 84.5 million in 2024 and is projected to grow from USD 107.5 million in 2025 to USD 614.2 million by 2032, exhibiting a CAGR of 28.01% during the forecast period.

The market is growing with the rising deployment of Artificial Intelligence (AI), driving the demand for high-speed, energy-efficient data transmission. Additionally, advancements in integration, thermal management, and packaging are enabling compact, scalable designs for next-generation data centers and cloud infrastructure.

Major companies operating in the co-packaged optics industry are RANVOUS Inc., Quanta Computer Inc., Broadcom, Marvell, Molex, LLC, FURUKAWA ELECTRIC CO., LTD, Lumentum Operations LLC, SENKO, Cisco Systems, Inc., NVIDIA Corporation, IBM, Huawei Technologies Co., Ltd., POET Technologies Inc., Coherent Corp., and Ciena Corporation.

The market is driven by the growing demand for high-bandwidth data transmission in data centers to support increasingly data-intensive workloads. Electrical interconnects struggle to meet performance requirements at scale, due to signal degradation and power inefficiencies.

CPO enables faster, more reliable communication by placing optical components closer to switch silicon, improving data throughput and reducing latency. This demand for higher-speed, energy-efficient connectivity is accelerating the adoption of co-packaged optics in modern high-performance computing and data center environments.

• In December 2024, IBM researchers developed an advanced CPO process to enable high-speed optical connectivity within data centers, complementing short-reach electrical wiring. By introducing the first publicly announced polymer optical waveguide (PWG), they demonstrated CPO’s potential to transform high-bandwidth data transmission between chips, circuit boards, and servers, setting a new standard for efficiency in next-generation computing infrastructure.

Key Highlights

1. The co-packaged optics industry size was valued at USD 84.5 million in 2024.
2. The market is projected to grow at a CAGR of 28.01% from 2025 to 2032.
3. North America held a market share of 35.95% in 2024, with a valuation of USD 30.4 million.
4. The less than 1.6 T segment garnered USD 25.4 million in revenue in 2024.
5. The telecommunications segment is expected to reach USD 234.7 million by 2032.
6. The market in Asia Pacific is anticipated to grow at a CAGR of 29.04% during the forecast period.

Market Driver

Rising Deployment of Artificial Intelligence

The co-packaged optics market is driven by the rising deployment of AI, which demands high-speed, energy-efficient data transmission across massive GPU clusters. Increasing AI workloads require scalable networking solutions that can support rapid data movement with minimal latency. 

CPO addresses these needs by integrating optical components closer to switch silicon, enhancing bandwidth while reducing power consumption. This growing reliance on AI infrastructure is accelerating the adoption of advanced optical interconnects within data centers and high-performance computing environments.

• In March 2025, NVIDIA launched Spectrum-X and Quantum-X silicon photonics switches, designed to connect millions of GPUs across AI factories while significantly cutting energy use and operational costs. These advanced networking solutions integrate optics with 4x fewer lasers, achieving 3.5x higher power efficiency, 63x improved signal integrity, 10x greater resiliency, and 1.3x faster deployment compared to conventional approaches.

Market Challenge

Increasing Fiber Count per Switch

The co-packaged optics market faces a significant challenge in the form of increasing fiber count per switch, which complicates system design and integration. The number of required fiber connections rises sharply as data center switches scale to higher bandwidths, creating space, routing, and management issues within the switch package. This complexity increases costs and limits the feasibility of compact, high-performance deployments.

Companies are developing advanced fiber management techniques, high-density optical connectors, and photonic integration solutions. Leading players like Intel, Broadcom, and Cisco are investing in modular CPO architectures and automated fiber alignment technologies to streamline integration and scalability.

Market Trend

Innovation in Co-packaged Optics Technology

The co-packaged optics market is registering a trend of advancement in co-packaged optics technology. This includes a shift to higher data rates, improved integration of optical and electronic components, and enhanced packaging efficiency. Innovations in thermal management, fiber routing, and assembly processes are enabling more compact and scalable designs. 

These technological improvements are supporting the adoption of CPO in high-performance computing environments, signaling a move toward more efficient and future-ready network architectures across data center and cloud infrastructure applications.

• In May 2025, Broadcom Inc. launched its third-generation 200G per lane (200G/lane) CPO product line, marking a major advancement in CPO technology. The company also showcased the maturity of its second-generation 100G/lane solutions, with notable enhancements in OSAT processes, thermal design, fiber routing, and yield.

Co-Packaged Optics Market Report Snapshot

Segmentation	Details
By Data Rate	Less than 1.6 T, 1.6 T, 3.2 T, 6.4 T
By Application	Data Centers, Telecommunications, Others
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, U.A.E., Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

Market Segmentation:

• By Data Rate (Less than 1.6 T, 1.6 T, 3.2 T, and 6.4 T): The less than 1.6 T segment earned USD 25.4 million in 2024, due to its widespread adoption in legacy systems and cost-sensitive applications requiring moderate bandwidth and lower power consumption.
• By Application (Data Centers, Telecommunications, and Others): The telecommunications segment held 38.61% share of the market in 2024, due to the increasing demand for high-speed, low-latency optical connectivity to support expanding network infrastructure and 5G deployment initiatives.

Co-Packaged Optics Market Regional Analysis

Based on region, the market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and South America.

North America co-packaged optics market share stood at around 35.95% in 2024, with a valuation of USD 30.4 million. The market is driven by the increasing need for high-performance photonics interconnects to support next-generation computing and data center infrastructure.

The demand for optical solutions that deliver higher bandwidth, lower latency, and greater energy efficiency is growing as data traffic continues to surge, especially in applications requiring massive parallel processing.

CPO enables these capabilities by integrating optical modules with switching silicon, resulting in faster, more reliable data transmission that meets the performance and scalability requirements of modern computing environments.

• In March 2024, Ranovus announced the industry’s first 6.4Tbps CPO solution with integrated laser at OFC 2024. Developed in collaboration with MediaTek, the solution supports high-radix 6.4Tbps optical interconnects for next-generation AI/ML SoC and Ethernet applications. It aligns with the growing demand for high-performance photonics in advanced computing infrastructure.

The co-packaged optics industry in Asia Pacific is poised for significant growth at a robust CAGR of 29.04% over the forecast period. The market in Asia Pacific is driven by the rapid expansion of hyperscale data centers across the region.

Leading cloud service providers and telecom operators are investing heavily in high-performance infrastructure to support increasing data traffic on acocunt of accelerating digital transformation. This surge in demand for scalable, energy-efficient, and high-bandwidth interconnect solutions is fostering the widespread adoption of CPO, positioning the region as a key contributor to the global optical communication ecosystem.

Regulatory Frameworks

• In the U.S., the Federal Communications Commission (FCC) plays a key role in regulating co-packaged optics by overseeing spectrum usage, electromagnetic interference, and compliance with communication infrastructure standards.
• In India, the market is primarily regulated by the Telecommunications Engineering Center (TEC), which oversees the standards, certifications, and compliance requirements for optical communication technologies used in data centers and telecommunication infrastructure across the country.
• In Europe, the European Telecommunications Standards Institute (ETSI) plays a key role in regulating CPO by developing standards that ensure interoperability, performance, and safety across optical communication technologies.

Competitive Landscape

Companies operating in the co-packaged optics industry are actively pursuing strategic initiatives to strengthen their market position. Key players are engaging in mergers and acquisitions to expand technological capabilities and accelerate product development. Additionally, firms are consistently introducing next-generation CPO solutions through targeted product launches. These actions reflect a highly competitive landscape, where organizations are aligning their resources and partnerships to capitalize on emerging opportunities and maintain leadership in advanced optical interconnect technologies across data center and high-performance computing sectors.

• In March 2024, Broadcom Inc. introduced Bailly, the industry’s first 51.2 Tbps CPO Ethernet switch, combining eight 6.4 Tbps silicon photonics optical engines with its StrataXGS Tomahawk 5 switch chip. This solution delivers 70% lower power consumption and eightfold improvement in silicon area efficiency over traditional pluggable transceivers, supporting more scalable and energy-efficient data center network architectures. 

List of Key Companies in Co-Packaged Optics Market:

• RANVOUS Inc.
• Quanta Computer Inc.
• Broadcom
• Marvell
• Molex, LLC
• FURUKAWA ELECTRIC CO., LTD
• Lumentum Operations LLC
• SENKO
• Cisco Systems, Inc.
• NVIDIA Corporation
• IBM
• Huawei Technologies Co., Ltd.
• POET Technologies Inc
• Coherent Corp.
• Ciena Corporation

Recent Developments (M&A/Partnerships/ Product Launches)

• In May 2025, AMD acquired Enosemi to accelerate innovation in co-packaged optics for next-generation AI systems. The integration strengthens AMD’s in-house capabilities in photonics, leveraging Enosemi’s proven expertise in high-volume photonic integrated circuit development.
• In April 2025, Sivers Semiconductors announced a strategic OEM partnership with O-Net Technologies to deliver high-performance external laser sources for CPO applications. By integrating advanced DFB laser arrays into O-Net’s external laser small form factor (ELSFP) modules, the collaboration supports next-generation switches and network components, enabling reduced power consumption and improved efficiency in data center and AI infrastructure deploying CPO solutions.
• In January 2025, Marvell Technology announced advancements in its custom XPU architecture by integrating co-packaged optics technology. This innovation enables cloud hyperscalers to scale AI servers from tens to hundreds of XPUs across racks, achieving higher bandwidth density, longer reach, and improved latency and power efficiency. The architecture is available for next-generation custom XPU deployments.
• In March 2024, MediaTek launched its next-generation ASIC design platform featuring CPO solutions at OFC 2024. The platform integrates high-speed electrical and optical I/Os within a single ASIC using 8x800G links, enhancing deployment flexibility. Leveraging CPO technology, it reduces board space, lowers system power by up to 50%, and increases bandwidth density for scalable, cost-efficient computing architectures.