Co-Packaged Optics - Global Strategic Business Report

The global market for Co-Packaged Optics was valued at US$84.1 Million in 2024 and is projected to reach US$585.6 Million by 2030, growing at a CAGR of 38.2% from 2024 to 2030. This comprehensive report provides an in-depth analysis of market trends, drivers, and forecasts, helping you make informed business decisions. The report includes the most recent global tariff developments and how they impact the Co-Packaged Optics market.

Global Co-Packaged Optics Market - Key Trends & Drivers Summarized

Why Is the Industry Moving Toward Co-Packaged Optics for Next-Generation Data Centers?

The explosive growth in data traffic from cloud computing, artificial intelligence, video streaming, and IoT has placed enormous pressure on data center infrastructure, pushing the limits of traditional architectures. As data rates continue to scale beyond 400G and 800G toward 1.6Tbps and beyond, co-packaged optics (CPO) has emerged as a critical innovation to meet future performance demands. Unlike traditional pluggable optics, where optical modules are housed separately from switching silicon, CPO integrates optical interfaces directly alongside switch ASICs on the same substrate, dramatically reducing electrical signal paths and power consumption. This architectural shift addresses a major bottleneck in high-speed data center switches by minimizing the need for high-power electrical signal transmission over lossy copper traces. With CPO, signal integrity is greatly enhanced, enabling faster and more reliable data transmission over shorter electrical interconnects. This efficiency also results in significantly lower thermal output and overall energy usage, aligning with the increasing emphasis on data center sustainability and carbon footprint reduction. Furthermore, the approach enables greater packaging density, which supports higher port counts and bandwidth within the same physical space. Hyperscale cloud providers and major networking companies are spearheading CPO adoption, seeking to future-proof their infrastructure against growing traffic loads and performance requirements. As latency-sensitive applications like AI model training, edge computing, and real-time analytics proliferate, the need for ultra-high-speed, low-latency interconnects is becoming non-negotiable, positioning co-packaged optics as a transformative force in next-generation data center design.

How Are Advancements in Silicon Photonics and Integration Enabling CPO Innovation?

The maturation of silicon photonics is playing a pivotal role in making co-packaged optics a commercially viable solution. By leveraging standard CMOS fabrication processes, silicon photonics allows the integration of optical components such as modulators, detectors, and waveguides onto silicon wafers at scale, reducing production costs and improving consistency. These advancements have enabled the development of compact, high-bandwidth optical engines that can be seamlessly co-located with switch ASICs. Packaging innovations are also crucial, as CPO demands precise alignment, advanced thermal management, and low-loss optical interfaces. Multi-chip modules (MCMs), 2.5D and 3D packaging technologies, and through-silicon vias (TSVs) are being employed to achieve tight integration while maintaining signal fidelity and thermal stability. Emerging materials, such as silicon nitride and advanced polymers, are improving waveguide performance and optical coupling efficiency. Passive alignment techniques and on-chip lasers are reducing the complexity and cost of assembling CPO systems, further paving the way for scalable deployment. In parallel, design automation tools specific to photonic integrated circuits (PICs) are gaining traction, streamlining development and accelerating time to market. Integration with machine learning and software-defined networking (SDN) is also becoming possible, enabling dynamic bandwidth allocation and real-time monitoring of optical interconnects. The convergence of silicon photonics, precision packaging, and system-level co-design is not only enhancing the performance of CPO solutions but also ensuring they can meet the rigorous demands of hyperscale data environments. These technological strides are positioning CPO as a foundational innovation for the evolution of high-speed interconnects in computing and communications.

What Market Forces and Industry Ecosystems Are Fueling CPO Adoption?

The growing market momentum for co-packaged optics is underpinned by a combination of data center scaling pressures, industry standardization efforts, and strategic collaboration across the optical networking ecosystem. Hyperscale data center operators such as Google, Microsoft, Amazon, and Meta are facing exponential growth in internal traffic driven by workloads like AI training and inference, requiring bandwidth and energy efficiencies that traditional transceiver architectures cannot deliver. At the same time, power and cooling limitations are becoming critical constraints in data center design, pushing operators toward CPO as a solution to lower power per bit and improve thermal efficiency. In response to these needs, consortia like the Optical Internetworking Forum (OIF) and the Consortium for On-Board Optics (COBO) are developing standards and interoperability frameworks that enable a diverse vendor ecosystem to collaborate on CPO components and systems. Semiconductor and optics companies are forming strategic partnerships to align ASIC and optical engine development cycles, which is crucial for synchronization and commercial readiness. Original equipment manufacturers (OEMs) are also exploring CPO for edge data centers and modular systems where size, power, and bandwidth are tightly constrained. Supply chain maturity is another factor driving adoption, with the availability of advanced silicon photonic chips, optical fibers, laser sources, and packaging technologies converging to support scalable production. Additionally, investment from venture capital firms and technology funds into CPO startups and innovation hubs signals growing confidence in the market potential of this paradigm. Together, these forces are creating a fertile environment for co-packaged optics to move from proof-of-concept stages into full-scale deployment across high-performance computing, telecommunications, and cloud infrastructure.

What Are the Core Drivers Accelerating the Growth of the Co-Packaged Optics Market?

The growth in the co-packaged optics market is driven by several core factors directly tied to performance scaling, energy efficiency demands, and evolving data infrastructure architectures. A key driver is the exponential rise in intra-data center traffic, particularly within hyperscale facilities that support AI workloads, content delivery, and cloud services. Traditional pluggable optics can no longer meet the bandwidth, latency, and power efficiency requirements of these environments, creating a clear need for CPO solutions. Another major driver is the increasing cost and complexity of managing signal integrity in high-speed copper connections as data rates exceed 100G per lane. Co-packaging eliminates many of these challenges by shortening electrical paths and integrating optics closer to the source, leading to better signal quality and reduced power consumption. The push for greener, more sustainable data centers is also a significant influence, as CPO systems offer measurable reductions in energy usage per transmitted bit. Industry collaboration on standards, including initiatives by the IEEE and OIF, is accelerating interoperability and ecosystem readiness, making CPO more accessible to vendors and system integrators. Semiconductor miniaturization, along with advanced photonics integration, is enabling cost-effective manufacturing and encouraging volume adoption. Additionally, the growing interest in disaggregated and modular data center architectures supports the deployment of CPO in flexible configurations that align with future-proof network strategies. Strategic investments by key players and the expansion of pilot programs in Tier 1 data centers signal a strong pipeline for adoption. These combined drivers are laying a solid foundation for the rapid expansion of the co-packaged optics market, making it a key enabler of next-generation computing and connectivity infrastructure.

Scope of the Report

The report analyzes the Co-Packaged Optics market, presented in terms of market value (USD). The analysis covers the key segments and geographic regions outlined below:

• Segments: Data Rate (Below 1.6 T Data Rate, 1.6 T Data Rate, 3.2 T Data Rate, 6.4 T Data Rate).
• Geographic Regions/Countries: World; United States; Canada; Japan; China; Europe (France; Germany; Italy; United Kingdom; Spain; Russia; and Rest of Europe); Asia-Pacific (Australia; India; South Korea; and Rest of Asia-Pacific); Latin America (Argentina; Brazil; Mexico; and Rest of Latin America); Middle East (Iran; Israel; Saudi Arabia; United Arab Emirates; and Rest of Middle East); and Africa.

Key Insights:

• Market Growth: Understand the significant growth trajectory of the Below 1.6 T Data Rate segment, which is expected to reach US$302.1 Million by 2030 with a CAGR of a 41.2%. The 1.6 T Data Rate segment is also set to grow at 38.5% CAGR over the analysis period.
• Regional Analysis: Gain insights into the U.S. market, valued at $22.9 Million in 2024, and China, forecasted to grow at an impressive 49.5% CAGR to reach $157.6 Million by 2030. Discover growth trends in other key regions, including Japan, Canada, Germany, and the Asia-Pacific.

Why You Should Buy This Report:

• Detailed Market Analysis: Access a thorough analysis of the Global Co-Packaged Optics Market, covering all major geographic regions and market segments.
• Competitive Insights: Get an overview of the competitive landscape, including the market presence of major players across different geographies.
• Future Trends and Drivers: Understand the key trends and drivers shaping the future of the Global Co-Packaged Optics Market.
• Actionable Insights: Benefit from actionable insights that can help you identify new revenue opportunities and make strategic business decisions.

Key Questions Answered:

• How is the Global Co-Packaged Optics Market expected to evolve by 2030?
• What are the main drivers and restraints affecting the market?
• Which market segments will grow the most over the forecast period?
• How will market shares for different regions and segments change by 2030?
• Who are the leading players in the market, and what are their prospects?

Report Features:

• Comprehensive Market Data: Independent analysis of annual sales and market forecasts in US$ Million from 2024 to 2030.
• In-Depth Regional Analysis: Detailed insights into key markets, including the U.S., China, Japan, Canada, Europe, Asia-Pacific, Latin America, Middle East, and Africa.
• Company Profiles: Coverage of players such as Advanced Micro Foundry (AMF), Ayar Labs, Broadcom Inc., Cisco Systems, Inc., Coherent Corp. and more.
• Complimentary Updates: Receive free report updates for one year to keep you informed of the latest market developments.

Some of the 42 companies featured in this Co-Packaged Optics market report include:

• Advanced Micro Foundry (AMF)
• Ayar Labs
• Broadcom Inc.
• Cisco Systems, Inc.
• Coherent Corp.
• Credo
• echnology Group
• DustPhotonics
• EFFECT Photonics
• Fujitsu Limited
• IBM Corporation
• Inphi (now part of Marvell)
• Intel Corporation
• Lumentum Holdings Inc.
• Molex LLC
• NEC Corporation
• Nvidia Corporation
• Ranovus Inc.
• Reflex Photonics (Smiths Interconnect)
• Rockley Photonics
• Sumitomo Electric Industries

This edition integrates the latest global trade and economic shifts into comprehensive market analysis. Key updates include:

• Tariff and Trade Impact: Insights into global tariff negotiations across 180+ countries, with analysis of supply chain turbulence, sourcing disruptions, and geographic realignment. Special focus on 2025 as a pivotal year for trade tensions, including updated perspectives on the Trump-era tariffs.
• Adjusted Forecasts and Analytics: Revised global and regional market forecasts through 2030, incorporating tariff effects, economic uncertainty, and structural changes in globalization. Includes historical analysis from 2015 to 2023.
• Strategic Market Dynamics: Evaluation of revised market prospects, regional outlooks, and key economic indicators such as population and urbanization trends.
• Innovation & Technology Trends: Latest developments in product and process innovation, emerging technologies, and key industry drivers shaping the competitive landscape.
• Competitive Intelligence: Updated global market share estimates for 2025 (E), competitive positioning of major players (Strong/Active/Niche/Trivial), and refined focus on leading global brands and core players.
• Expert Insight & Commentary: Strategic analysis from economists, trade experts, and domain specialists to contextualize market shifts and identify emerging opportunities.