From Pluggables to Co-Packaged Optics (CPO): The Transition Transforming Network and AI Architecture

Estimated reading time: 3 minutes

In recent years, optical transceiver technology has been steadily shifting toward placing the optics closer to the ASIC. Traditionally, pluggable modules inserted into the front panel of a switch sit at the edge of the printed circuit board and have long served as the standard solution for connecting switches and servers in data centers.

They remain popular for their flexibility, ease of replacement, and straightforward scaling. However, they face growing challenges, especially rising power consumption and limits on how much bandwidth can be delivered per unit of front panel area.

To address these constraints, the industry has begun migrating the optical engine closer to the switch ASIC in an effort to shorten the copper trace used for electrical signalling. Although these near-packaged approaches improve electrical performance, they still diverge from the well-established pluggable ecosystem, and key limitations remain. As a result, many in the industry expect the transition to progress directly toward fully integrated solutions such as co-packaged optics.

IDTechEx’s new report “Co-Packaged Optics (CPO) 2026-2036: Technologies, Market, and Forecasts” examines this transition in detail. It reviews recent advances in CPO technology, tracks emerging packaging approaches, assesses the strategies of leading companies, and provides long-term market forecasts. The report highlights how CPO adoption is set to reshape data center infrastructure in the coming decade.

The Importance of Advanced Semiconductor Packaging Technologies for Co-Packaged Optics (CPO)

Traditional pluggable optical modules are increasingly constrained by signal loss, power consumption, and latency because they require long electrical traces between the switch ASIC and the optical engine. Co-packaged optics overcomes these limitations by placing the optical engine much closer to the switching silicon. Its success depends on advanced semiconductor packaging technologies that enable high-density integration of photonic and electronic ICs, along with the seamless attachment of optical engines to switch ASICs or XPUs. This requires a range of packaging approaches, including 2.5D interposers, Through Silicon Vias, fan-out wafer-level packaging, and more recently, 3D integration supported by hybrid bonding.

At GTC 2025, NVIDIA introduced two new networking switch platforms, Spectrum X Photonics and Quantum X Photonics, both built on co packaged optics. Central to these platforms is TSMC’s System on Integrated Chips technology, which provides the 3D integration infrastructure for NVIDIA’s design. The SoIC X variant, TSMC’s advanced bumpless hybrid bonding process, enables vertical stacking of logic dies and other heterogeneous components at sub-ten-micrometre pitch. This dramatically shortens interconnect length and reduces resistance and latency.

Other major players, including Broadcom, have also adopted TSMC’s COUPE platform, underscoring the growing importance of 3D integration and hybrid bonding in CPO.

Co-Packaged Optics (CPO) Market Trajectory

According to IDTechEx, the Co-Packaged Optics (CPO) market is projected to exceed $20 billion by 2036, growing at a robust CAGR of 37% from 2026 to 2036. CPO network switches are expected to dominate revenue generation, driven by each switch potentially incorporating up to 16 CPO PICs. Optical interconnects for AI systems will constitute approximately 10% of the market, with each AI accelerator typically utilizing one optical interconnect PIC to meet increasing demands for high-speed data processing and communication in advanced computing applications.

“Co-Packaged Optics (CPO) 2026-2036: Technologies, Market, and Forecasts” offers an extensive exploration into the latest advancements within co-packaged optics technology. The report delves deep into key technical innovations and packaging trends, providing a comprehensive analysis of the entire value chain. It thoroughly evaluates the activities of major industry players and delivers detailed market forecasts, projecting how the adoption of CPO will reshape the landscape of future data center architecture.

Central to the report is the recognition of advanced semiconductor packaging as the cornerstone of co-packaged optics technology. IDTechEx places significant emphasis on understanding the potential roles that various semiconductor packaging technologies may play within the realm of CPO.