The co-packaged optical (CPO) modules market is heading into an era of transformative growth. Demands from artificial intelligence, high-performance computing (HPC), and green data center innovation are pushing this shift.
Industry forecasts show a jump from $44.6 million in 2024 to nearly $960 million by 2031. That’s a wild 42.9% CAGR.
Major technology giants and industry alliances are driving research, standardization, and deployment. CPO looks set to overtake traditional pluggable optics as the backbone for next-gen data communications.
What is Co-Packaged Optics and Why It Matters
Co-packaged optics takes optical engines and places them right next to switching ASICs or processors on a single substrate. This cuts down the electrical trace length between chip and optical interface, slashing power use and latency.
Pluggable optics, on the other hand, connect modules over external interfaces. CPO’s approach wipes out a bunch of thermal and bandwidth headaches that have long held back data center scalability.
Benefits Over Traditional Pluggable Optics
Pluggable optics still have a place, but they use 50–60% more power than CPO. With direct coupling, CPO keeps signals cleaner, reduces cooling needs, and lets you move more data at once.
That’s a big deal for AI-heavy workloads and the massive data crunching that’s everywhere now.
Key Drivers Behind Market Growth
Several forces are pushing CPO adoption. Efficiency, speed, and environmental responsibility are at the heart of it.
The AI and HPC Revolution
AI and high-performance computing need crazy amounts of fast data transfer between processing units. CPO’s low-latency, high-bandwidth design is built for this world, without sending energy use through the roof.
- AI Model Scaling – Large language models and neural networks need tons of interconnectivity between processing nodes.
- Data Center Efficiency – CPO cuts the thermal load, so you don’t need as much expensive cooling gear.
- Green Computing Initiatives – Lower energy draws line up with sustainability goals, which big cloud providers really care about.
Leading Players and Industry Alliances
The race for CPO dominance has drawn in some of the biggest names in semiconductors. Broadcom, NVIDIA, Cisco, Ranovus, Intel, and Marvell Technology are all pouring resources into R&D, partnerships, and acquisitions to get ahead.
Standards and Compatibility
Collaboration across the industry is crucial for speeding things up. The Optical Internetworking Forum (OIF) and the Open Compute Project (OCP) are pushing for open specs to ensure everything works together and to drive down costs.
Standardization will matter a lot when large-scale deployments kick off in the late 2020s.
Market Segmentation and Adoption Timeline
The CPO market breaks down by bandwidth capacity like this:
- Less than 1.6T
- 1.6–3.2T
- More than 3.2T
Key application areas? Here’s where CPO’s landing first:
- Data centers and HPC clusters – These guys drive most of the demand.
- Telecommunications networks – They’re using CPO for faster, higher-capacity backbones.
Geographic Growth Hotspots
The biggest growth is coming from the United States, China, Japan, South Korea, and Europe. These places have strong semiconductor industries and are betting big on next-gen data infrastructure.
The Road Ahead: CPO as the Data Center Backbone
Widespread deployment of CPO technology will likely happen between 2026 and 2028. This tech is set to become the go-to standard for high-capacity interconnects in data centers everywhere.
Cloud giants like Google, Amazon, Microsoft, and Meta are already ramping up adoption. As they do, cost savings and environmental benefits will push old-school optics further into the background.
Co-packaged optics isn’t just a small step forward. It’s a pretty dramatic shift in how data centers get designed, built, and run in the years ahead.
The mix of performance gains, energy efficiency, and industry-wide support puts CPO at the heart of the next wave in semiconductor tech. It’s honestly one of the most interesting trends to watch right now.
Here is the source article for this story: Co packaged Optical (CPO) Modules Market Projected to Expand at 42.9% CAGR by 2031 | Broadcom, NVIDIA, Cisco, Marvell Technology