Co-Packaged Optics Market Size Set to Reach USD 2.40 Billion by 2035 | As AI Data Centers, 800G/1.6T Networking, Silicon Photonics and Energy-Efficient Interconnects Drive 34.7% CAGR

The global Co-Packaged Optics Market reached US$122.1 million in 2025 and is expected to reach US$2,401.0 million by 2035, growing at a CAGR of 34.7% during 2026-2035. The market is being driven by rapidly expanding AI data centers, increasing GPU and accelerator cluster sizes, rising demand for 800G and 1.6T networking, and the need to reduce electrical-interconnect power consumption.

By moving optical engines closer to switching silicon, CPO architectures can address bandwidth, signal-integrity and energy-efficiency constraints that become increasingly significant as AI infrastructure scales.

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Recent 2026 Industry Developments

United States:

AI Data Centers Accelerate CPO Commercialization

March 2026 - Broadcom expands its CPO and AI connectivity portfolio:
Broadcom showcased a 102.4T Ethernet switch with co-packaged optics, alongside 200G/lane optical technologies, at OFC 2026. Its portfolio spans switching ASICs, optical DSPs, SerDes and CPO technologies, demonstrating the movement toward integrated optical connectivity for large AI clusters. Broadcom also highlighted the Optical Compute Interconnect Multi-Source Agreement, supporting development of an open multi-vendor ecosystem.

May 2026 - NVIDIA brings CPO into production:

NVIDIA announced that its Spectrum-X Ethernet Photonics technology had entered production as part of the Vera Rubin platform. The technology integrates CPO with Spectrum-X switching and is designed to support very large AI factories while improving networking power efficiency.

May 2026 - GlobalFoundries launches SCALE CPO platform:

GlobalFoundries introduced its SCALE silicon-photonics CPO solution, described as an OCI-MSA-capable optical module platform for AI-scale interconnects. The solution combines silicon photonics with wavelength-division multiplexing to increase bandwidth density and scalability.

May 2026 - Marvell advances open co-packaged connectivity:

Marvell highlighted the Open CPX MSA, which is intended to establish common specifications for integrating CPO and NPO into switches and servers. Marvell noted that the initiative is designed to simplify adoption and improve interoperability across next-generation data-center connectivity systems.

September 2026 - Marvell demonstrates next-generation optical technologies:

At ECOC 2026, Marvell showcased 2nm optical technologies alongside its 102.4T CPO platform, including 400G/lane demonstrations designed for future 3.2T connectivity. The company is linking leading-edge semiconductor processes with optical interconnects to address bandwidth and power requirements in AI infrastructure.

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Japan:

Photonic Networking and CPO-Related Infrastructure Advance

February 2026 - NTT advances photonics-electronics convergence:

NTT demonstrated a high-capacity, low-power photonics-electronics convergence switch using its PEC-2 technology. NTT specifically identifies CPO as an important implementation approach because placing optical transceivers close to semiconductor ICs can reduce high-speed electrical wiring, signal loss and power consumption.

March 2026 - Japanese optical companies expand AI data-center fiber infrastructure:
Sumitomo Electric, AFL, Corning and TeraHop announced an initiative to define a four-core multicore-fiber specification for AI data centers. The work addresses increasing optical connection density as AI infrastructure expands.

August 2026 - Japan advances energy-efficient photonic networking:

KDDI, NTT, Fujitsu's 1Finity, NEC, Rakuten Mobile, Oki Electric and Sumitomo Electric announced that an ITU-T framework for low-latency and energy-efficient networks had been approved as an international standard. The framework supports Japan's All-Photonics Network strategy and is relevant to future AI and physical-AI infrastructure.

September 2026 - Japanese companies complete multicore-fiber specification:

AFL, Corning, Sumitomo Electric and TeraHop completed the SDM4 MCF Multi-Source Agreement specification for four-core multicore fiber targeting AI data centers and short-reach optical links. The specification is intended to improve interoperability and support higher-density optical infrastructure.

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Strategic Growth Landscape: M&A, CPO Standardization, Silicon Photonics and AI Infrastructure

The CPO industry is transitioning from technology demonstrations toward commercial deployment and scalable manufacturing. AI data-center operators increasingly require higher bandwidth while controlling networking power, making optical connectivity a more important component of overall AI infrastructure architecture.

A major strategic trend is the development of open standards and multi-vendor ecosystems. Broadcom's OCI MSA and Marvell's Open CPX MSA are examples of industry efforts aimed at improving interoperability and reducing barriers associated with integrating optics, switching silicon, packaging and fiber systems.

The technology roadmap is also moving from 800G toward 1.6T and eventually higher per-lane speeds. TrendForce reported in June 2026 that CPO and NPO markets could exceed US$39 billion by 2030 as AI data centers increase rack density and optical connectivity requirements.

Advanced packaging is becoming equally important. CPO requires close integration of optical engines, electrical ICs, lasers, substrates, thermal systems and fiber coupling. Consequently, yield, alignment, thermal management and serviceability remain important challenges as the industry moves toward volume production.

Key Players and Strategic Positioning

Broadcom

Broadcom is developing CPO around high-radix Ethernet switching for AI clusters. Its portfolio includes 102.4T switching with CPO, 200G/lane optical technologies and a roadmap toward higher-bandwidth optical connectivity. Its involvement in open optical-interconnect standards also supports broader ecosystem development.

NVIDIA

NVIDIA is integrating CPO directly into its AI networking architecture through Spectrum-X Ethernet Photonics and Quantum-X InfiniBand Photonics. Its production deployment connects CPO with large-scale AI factories and focuses on improving bandwidth and networking power efficiency.

Marvell Technology

Marvell is developing CPO, NPO and optical-DSP technologies for AI and cloud infrastructure. Its 102.4T CPO platform and 2nm optical demonstrations demonstrate an approach combining advanced silicon processes, optical connectivity and next-generation data-center networking.

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Co-Packaged Optics Market Segmentation Analysis

By Component

The market includes optical engines, electrical integrated circuits, laser sources, optical interposers/substrates and other components. Optical engines are central because they convert electrical signals into optical signals close to switching silicon. Increasing data rates are raising requirements for lasers, modulators, photodetectors, coupling structures and thermal solutions.

By Integration Approach

Key categories include on-board optics, fully integrated CPO modules and hybrid solutions. Fully integrated CPO places optical engines close to the switching ASIC and minimizes high-speed electrical traces. Hybrid approaches provide flexibility during the industry's transition from conventional pluggable optics toward deeper optical integration.

By Data Rate

The market covers 400G, 800G, 1.6T, 3.2T and 6.4T-and-above architectures. 800G represents an important commercialization stage, while 1.6T and higher speeds are gaining attention as AI clusters scale. Increasing per-lane bandwidth is creating demand for advanced optical engines, DSPs, lasers and packaging.
By Application

Applications include hyperscale data-center switching, high-performance computing, cloud network infrastructure, telecommunications networks and edge/distributed computing. Hyperscale AI data centers are a major demand driver because large GPU clusters create significant east-west traffic between compute and networking components.

Regional Analysis

United States

The United States is a leading CPO market because of its concentration of hyperscalers, AI-chip companies, networking vendors and photonics innovators. NVIDIA, Broadcom, Intel, Marvell, Coherent and Ayar Labs are advancing different parts of the CPO ecosystem. The rapid expansion of AI data centers is increasing the need for higher bandwidth and lower-power interconnects.

Japan

Japan has strong capabilities in optical communications, fiber, photonics and telecommunications infrastructure. NTT's photonics-electronics convergence research and the country's All-Photonics Network program are creating an ecosystem around high-capacity, energy-efficient optical communications. Sumitomo Electric is also contributing to higher-density optical infrastructure for AI data centers.

Germany

Germany is positioned around semiconductor engineering, advanced packaging, photonics research and industrial technology. Dresden's semiconductor ecosystem provides a strong environment for heterogeneous integration, chiplets and photonic packaging. European technology programs are increasingly connecting CPO with energy-efficient data-center infrastructure and next-generation AI computing.

South Korea

South Korea's CPO opportunity is closely connected to its strength in semiconductors, HBM and advanced packaging. Samsung and SK hynix are expanding AI-related semiconductor infrastructure, while Korean materials and equipment suppliers are beginning to target the emerging optical-chip packaging opportunity.

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