Co-packaged optics (CPO) is quickly becoming a foundational technology for next-generation AI data centers. By moving optical components directly onto the switch chip, CPO promises big gains in speed and power efficiency.
This blog takes a look at what CPO is, why it’s suddenly important, how it stacks up against competing ideas, and what its rise could mean for hyperscalers and large enterprises building AI and HPC clusters.
What Is Co-Packaged Optics and Why Does It Matter?
Co-packaged optics (CPO) puts optical components right alongside—or even on top of—the data center switch ASIC. That’s a shift from traditional pluggable optical modules.
Right now, switches connect to network interface cards (NICs) using optical transceivers and digital signal processors (DSPs) to convert electrical signals to optical ones.
CPO changes this by embedding the optical conversion function at the switch package itself. You get fewer intermediate components and much shorter electrical paths.
This approach gives the data center network a completely different power and performance profile.
How CPO Changes the Data Path
Normally, signals travel from the switch ASIC, across a board, into a NIC, through a transceiver, and finally out over fiber. CPO collapses most of this chain.
With optical engines right next to the switch ASIC, you minimize signal degradation and can often skip those power-hungry DSPs entirely.
This isn’t just a small tweak—it’s a move toward a more tightly integrated, photonics-driven data center fabric built for AI-level bandwidth.
Power Efficiency: A Critical Driver for AI Data Centers
AI workloads put huge demands on network infrastructure. In big AI data centers, optical networking can eat up almost 10% of total compute power.
When you’re scaling to tens of thousands of GPUs, that kind of energy overhead can get out of hand—both economically and thermally.
CPO tackles this problem head-on. By doing away with separate DSP-heavy optics and shortening electrical interconnects, CPO can cut power usage by an estimated 60–70% compared to traditional pluggable optics.
Scaling to 400G Per Lane and Beyond
AI and HPC networks are barreling toward 400G per lane optical connections. Copper cabling just can’t keep up at those speeds over any real distance—loss, crosstalk, and power-hungry equalization become deal-breakers.
CPO is built to work efficiently at these high lane speeds. By putting optics closer to the ASIC, it improves signal integrity and supports the kind of extreme bandwidth that GPU-to-GPU and rack-to-rack links demand in AI-first data centers.
Industry Momentum: Nvidia, Broadcom, TSMC and Beyond
Several major semiconductor and systems vendors are doubling down on CPO-capable platforms. That’s a strong signal for the ecosystem.
Nvidia has announced next-gen 400T bps photonics switches with co-packaged optics, aiming squarely at AI supercomputing networks. Broadcom and TSMC are also pushing CPO-ready switch silicon and packaging tech to support hyperscale rollouts.
Caution and Alternatives from Network Vendors
Still, not everyone’s jumping in with both feet. Cisco has flagged concerns about manufacturing complexity and reliability at scale.
Tight optical and electronic integration at the package level means stricter manufacturing tolerances and tougher test and validation.
Arista is making a strong case for linear pluggable optics (LPO) as an alternative. LPO trims power use by simplifying optics and skipping some DSP features, while keeping the modularity and serviceability that pluggable transceivers offer.
Reliability, Serviceability, and Operational Concerns
Serviceability is a big open question for CPO. With pluggable optics, you can usually swap out a failed module in the field—cheap and easy.
With CPO, though, optics and switch ASICs are tightly tied together. If the embedded optics go bad, you might have to replace an entire switch or line card, not just a single optical module.
This shakes up the economics of failure and spare parts. Operators will need better monitoring, more redundancy, and maybe some new maintenance playbooks.
How CPO Compares to LPO and Co-Packaged Copper
There are two notable alternatives to CPO right now:
Who Should Care Now—and What Comes Next?
Right now, CPO is mostly aimed at hyperscalers running massive AI and HPC environments. For these folks, the mix of power savings, bandwidth density, and future-proofing is hard to ignore—even if the manufacturing and maintenance models need to catch up.
But large enterprises building private AI or HPC clusters should keep an eye on CPO too. Adoption isn’t urgent for most, but the direction is set: as AI workloads grow and 400G-per-lane networking becomes standard, CPO-style integration will probably become a must for hitting performance and efficiency goals.
Long-Term Outlook for AI Networking
Most folks in the field seem to agree: as AI clusters keep getting bigger and more complex, co-packaged optics will move from being a niche thing to a core part of data center networks. The real questions now are about how fast manufacturing, reliability, and operational models can catch up.
If you’re planning out AI infrastructure for the next few years, it’s probably smart to start considering CPO in your tech evaluations. Make sure your future network designs can handle this shift toward tightly integrated photonics.
Here is the source article for this story: What is co-packaged optics? A solution for surging capacity in AI data center networks