Interpretation: Opportunities and challenges of CPO technology in data centers, 1.6T or a turning point

Communication rate is one of the key indicators for the development of AI computing power. By co-packaging optical modules and switching chips, the cost and power consumption can be greatly reduced, including TSMC, Intel, Marvell, Broadcom and other mainstream chip manufacturers have relevant layouts. In the beginning of 2025, CPO (photoelectric co-packaging) technology and its solutions have become one of the hot spots in the capital market. However, it is worth noting that due to the different development stages of the computing industry at home and abroad and their actual needs for communication rates, there are also many differences in the implementation of CPO programs. The industry believes that from the practical application point of view, from 2026 to 2027, starting from the 1.6T rate, the rate of the traditional pluggable optical module will be upgraded or reach the limit, and the subsequent optical interconnection upgrade may turn to the CPO program.

I. The potential and advantages of CPO technology

1. Improve communication rate and reduce power consumption: CPO technology can effectively improve the communication rate of data centers by co-packaging optical modules and switching chips, and meet the needs of exponential growth of AI computing power. At the same time, compared with traditional pluggable optical modules, CPO solutions can significantly reduce power consumption, which is of great significance for the challenge of increasing energy consumption faced by data centers.
2. Reduce cost and improve efficiency: The integrated design of CPO technology reduces the connection loss between the optical module and the switching chip, reducing the complexity and cost of the system. In addition, CPO solutions can reduce the number of data centers to be built, thereby reducing operational costs and improving overall operational efficiency in the long term.

2. Differences in data center demand at home and abroad

1. Different development stages: Domestic data centers are mostly in the 400G rate pluggable optical module stage, while foreign cloud computing data centers have begun to transition from 400G rate to 800G rate, and even some AI applications have begun to deploy 800G rate optical modules. This difference reflects the different development stages of data center construction and technology application at home and abroad.
2. Application requirements and cost considerations: Most of the domestic data centers are currently more inclined to use lower-cost, technologically mature 400G rate solutions, and ultra-large Internet companies due to their huge data processing needs and the pursuit of high computing power, there is a greater application demand for higher rate or CPO solutions, although the early investment is high, but in the long run, It can bring more computing power and greater customer satisfaction.

3. Challenges facing CPO technology

1. Technology maturity and reliability: CPO technology is still in the development and testing stage and is not yet fully mature. The reliability and stability of optoelectronic devices is one of the key technical problems, which needs further research and optimization to ensure its long-term stable operation in practical applications.
2. Difficulty in maintenance and replacement: Because CPO integrates a large number of devices, once the internal devices are damaged, it is difficult to replace them and the maintenance cost is relatively high. This may bring some challenges to the operation and maintenance of the data center, which requires manufacturers and users to jointly explore more effective maintenance strategies.
3. Slow standardization process: Although several industry organizations and standards bodies have begun to develop CPO-related standards, the standardization process still takes time. The lack of a unified standard may affect the compatibility between different module manufacturers, thus affecting the choice of CPO solutions and application promotion.

Fourth, market prospects and development trends

1.1.6T rate as a turning point: The original article mentioned that from the 1.6T rate, the rate upgrade of the traditional pluggable optical module may reach the limit, and the subsequent optical interconnection upgrade is expected to turn to the CPO scheme. This means that in the next few years, with the continuous improvement of communication rate, the application of CPO technology will gradually increase, and the market prospect is broad.
2. Gradually increasing market share: According to LightCounting data, pluggable optical modules will continue to dominate the entire optical module market in the next five years or even longer, but the market share of products equipped with CPO solutions will gradually increase, although the speed is relatively slow. This indicates that CPO technology will gradually be accepted by the market and take a place in the field of data center communications.
3. Active layout of manufacturers: A number of A-share listed companies such as Zhongji Xuchuang and Xinyisheng have made new progress in 1.6T rate-related products, showing the industry's attention to and active investment in CPO technology. The R&D and marketing activities of these vendors will help to promote the maturity and popularization of CPO technology.

The application of CPO technology in data centers has significant advantages and broad market prospects, but it also faces challenges in technology, cost and standardization. With the continuous maturity of the technology and the gradual acceptance of the market, CPO technology is expected to achieve a wider range of applications in the next few years, providing strong support for data center computing power improvement and communication efficiency optimization.