| Study Period | 2020 - 2030 |
| Market Size (2025) | USD 118.76 Million |
| Market Size (2030) | USD 575.32 Million |
| CAGR (2025 - 2030) | 37.10 % |
| Fastest Growing Market | Asia Pacific |
| Largest Market | North America |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Co-packaged Optics Market Analysis
The Co-packaged Optics Market size is estimated at USD 118.76 million in 2025, and is expected to reach USD 575.32 million by 2030, at a CAGR of 37.10% during the forecast period (2025-2030).
Co-packaged optics, an innovative technology, integrates optical components directly into a switch ASIC package. This integration addresses the bandwidth and power challenges of the next generation. By merging optics and electronics, co-packaged optics tackles issues like bandwidth density, communication latency, and power efficiency in today's data-driven networks.
This technology combines silicon and optics on a single substrate, aiming to reduce energy use and latency. It also rethinks strategies, like near-compute in CMOS layouts, by positioning essential communication components closer together for better efficiency.
- Current-generation global networks and data centers, fueled by demands from high-resolution video streaming, virtual reality, the Internet of Things (IoT), high-performance computing (HPC), and advancements in artificial intelligence and machine learning (AI/ML), grapple with soaring demands. These include the need for heightened bandwidth, diminished latency, and reduced power consumption. In response, the industry is channeling investments into co-packaged optics (CPOs), signaling a new era of solutions crafted for the demands of emerging applications and the future's high-capacity networks. Furthermore, numerous companies are investing and forging collaborations with various consortiums, amplifying the market's potential.
- Broadcom highlights that co-packaged optics (CPO) represent a cutting-edge integration of optics and silicon on a unified substrate. This integration is pivotal in tackling the bandwidth and power challenges of the next generation. CPO synergizes expertise from fiber optics, digital signal processing (DSP), switch ASICs, and advanced packaging & testing. This collaboration promises significant value for data centers and cloud infrastructures. As investments in data centers surge and the demand for CPOs escalates, the market is poised for robust growth.
- Co-packaged optics (CPO) is poised to lead the way in communication, especially within the Silicon Photonics (SiPh) market. By shortening the electrical path, CPO conserves energy, minimizes heat generation, and boosts data transmission speeds. As silicon photonics evolves, numerous fabrication facilities and foundries are rolling out advanced passive and active devices, from modulators and photodetectors to lasers.
- The inherent complexity of networking within and between data centers remains a significant barrier to the widespread adoption of co-packaged optics. While co-packaged optics deliver high-bandwidth, low-power interconnects at the chip level, scaling these benefits to a full network architecture is a considerable challenge.
- Recent events, including the surging demand for cryptocurrencies, trade barriers between the US and China, and escalating geopolitical tensions, have underscored the complexities of the industry's globalized supply chains, leading to production delays and shortages. This reliance on a limited number of players within the semiconductor supply chain introduces significant risks; even minor disruptions can yield extensive repercussions. Heightened geopolitical tensions are prompting nations to diversify their sourcing capabilities. Additionally, fluctuations in silicon prices, influenced by various trade scenarios, are anticipated to impact the market.
Co-packaged Optics Market Trends
1.6 T Data Rates Segment to Hold Significant Market Share
- Engineers face a pivotal decision to opt for the more conventional 1.2T and settle for modest networking enhancements or push the envelope with 1.6T, pioneering another optical milestone, truly addressing networking needs. Ciena Corporation reveals that the 200GBaud 1.6T not only doubles the coverage of the 800G but also does so with 25% fewer transceivers, leading to a quarter of energy savings.
- The forthcoming generation of coherent optics is set to seamlessly integrate with next-gen routing data paths at 800G, ensuring widespread 800G connectivity. The 1.6 Tb/s (terabits per second) stands out as the prime candidate, adeptly accommodating any blend of 400G and 800G rates and fully supporting multiples of 800G. The ~200Gbaud 1.6T is essential for universal 800G connectivity. This trend underscores the industry's pivot towards the 1.6 Terabit solution to cater to escalating demands.
- In September 2024, Source Photonics unveiled its 1.6T and 800G optical modules, active optical cables (AOC), and direct attach cables (DAC), all leveraging the advanced single-lambda 200G PAM4 (Pulse Amplitude Modulation 4-Level) technology. The lineup also features the 800G 4×200G DR4 (Data Rate 4)/FR4 (Forward Error Correction 4)/LR4 (Long Reach 4) modules and the versatile 400G/800G optical modules, all designed to support immersion liquid cooling.
- Source Photonics’ newly introduced 1.6T series boasts the DR8 (Data Rate 8), 2xFR4 optical modules, and DAC/ACC (Active Copper Cable) copper cables. The 800G lineup is expansive, featuring SR8 (Short Reach 8), DR8, and 2xFR4 modules based on single-lambda 100G, alongside DR4, FR4, and LR4 modules leveraging single-lambda 200G.
- Additionally, the series includes DAC, ACC, and active electrical cables (AEC) copper cables, all elegantly packaged in OSFP (Octal Small Form-factor Pluggable) or QSFP-DD (Quad Small Form-factor Pluggable Double Density) form factors, ensuring a diverse range of optical connectors and interface options.
- In summary, as AI infrastructure investments surge, they are catalyzing the evolution of advanced optical connectivity solutions. Innovations in the 1.6 T segment not only cater to the unique demands of AI clusters but also address challenges related to cost and power consumption.
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Asia Pacific Expected to Witness Significant Growth
- Asia Pacific is poised to emerge as the fastest-growing region in the coming years, spurred by swift advancements in data centers, telecommunications, and high-performance computing. In this digital age, domestic cloud service providers (CSPs) in China, especially Alibaba Cloud and Tencent Cloud, are crucially driving the adoption of co-packaged optics (COPs). Countries like China, India, Japan, and Korea are making significant investments to enhance digital technologies across various sectors. These unified efforts are set to substantially elevate the adoption of COPs, propelling the market's growth.
- According to the India Brand Equity Foundation (IBEF), India is evolving from an emerging market to a developed economy, with advanced technology at the forefront of this transformation. Forecasts suggest that by 2047, India could ascend to the status of an economic superpower, targeting a GDP of USD 26 trillion. Given India's vast digital populace and the rapid growth of its digital economy, there's an imperative need for a broader network of data centers.
- In India, cloud computing has evolved from a mere operational tool to a catalyst, driving innovation, flexibility, and corporate expansion. In response to the burgeoning demand for high-performance computing (HPC) solutions, many companies are making significant investments in the country.
- In December 2024, Ace Cloud Hosting, a subsidiary of Real-Time Data Services (RTDS) Group, launched a new cloud region in Noida, India, in collaboration with industry leaders NetApp and Quantum. Established as a Tier IV data center, the initiative aims to provide low-latency access to cutting-edge cloud technologies. AceCloud underscores that this new facility will be equipped with specialized hardware for AI and HPC tasks, including cloud GPUs and storage optimized for high Input/Output Operations Per Second (IOPS). The partnership with NetApp and Quantum, as emphasized by the company, establishes a solid groundwork, delivering innovative solutions that enhance performance and stimulate growth, creating demand for co-packaged optics in the country.
- Moreover, in November 2024, Thailand's Board of Investment (BOI) sanctioned investments amounting to 66.2 billion baht (USD 1.96 billion) for fresh data center initiatives in Chonburi Province. These ventures are supported by tech behemoths Google and China's GDS. The BOI's recent announcement spotlighted a notable endorsement: a Thai Baht (THB) 32.8 billion investment from Quartz Computing, a subsidiary of Alphabet, Google's parent entity, targeting a hyperscale data center in Chonburi. Such high investments are creating growth opportunities for co-packaged optics in the region.
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Co-packaged Optics Industry Overview
The Co-packaged optics market, dominated by major players like Ayar Labs Inc., Broadcom Inc., Cisco Systems Inc., IBM Corporation, Intel Corporation, and Microsoft Corporation, showcases a competitive landscape where firms vie for dominance through pricing, product offerings, and market share.
While major companies steer the market with their R&D and consolidation moves, the landscape is marked by deep market penetration and rising fragmentation. Innovation is the key to a sustainable competitive edge, with incumbents leaning on product differentiation and market expansion strategies.
Brand identity plays a pivotal role in the market dynamics. Established brands, synonymous with superior solutions, enjoy a competitive edge bolstered by their access to distribution channels, business relations, and innovative platforms.
Top players boasting of long-standing market credibility benefit from robust supplier-distribution ties and high market penetration. They're also zeroing in on lucrative industries, like hyperscalers, which present fresh applications for co-packaged optics.
These key market players wield significant influence, underscoring the heightened intensity of competitive rivalry.
Co-packaged Optics Market Leaders
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Ayar Labs Inc.
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Broadcom Inc.
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Cisco Systems Inc.
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IBM Corporation
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Intel Corporation
- *Disclaimer: Major Players sorted in no particular order
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Co-packaged Optics Market News
- January 2025: NTT DOCOMO Ventures, Inc. invested in Ayar Labs, Inc. through its managed fund. The investment aims to propel advancements in optical I/O technologies, hasten the real-world application of innovative solutions, and cultivate new value in the sector. These technologies are pivotal for Co-Packaged Optics (CPO), which integrates optical communication directly into chip packages, servers, network devices, and other hardware. Leveraging these technologies, Ayar Labs enables data transmission via optical signals, both at the chip level and inter-chip.
- December 2024: IBM unveiled an internal study detailing a co-packaged optics (CPO) prototype. This prototype harnesses polymer optical waveguides (PWG) to facilitate lightning-fast connectivity with data centers. IBM claims this technology can accelerate the training of artificial intelligence (AI) models by up to five times compared to traditional wiring while also slashing data center energy consumption by over 80%. This announcement marks a significant stride in the computing industry's ongoing endeavor to enhance data speeds within data centers and on circuit boards, especially as the processing needs of generative AI challenge the boundaries of Moore’s Law.
Co-packaged Optics Industry Segmentation
The market is defined by the revenue generated through the sale of co-packaged optics offerings by various vendors operating in the market.
The co-packaged optics market is segmented by data rates (less than 1.6 T, 1.6 T, 3.2 T, and 6.4 T) and by geography (North America, Europe, Asia-Pacific, Latin America, and Middle East and Africa). The market sizes and forecasts are provided in terms of value (USD) for all the above segments.
| By Data Rates | Less than 1.6 T |
| 1.6 T | |
| 3.2 T | |
| 6.4 T | |
| By Geography | North America |
| Europe | |
| Asia | |
| Australia and New Zealand | |
| Latin America | |
| Middle East and Africa |
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Co-packaged Optics Market Research FAQs
How big is the Co-packaged Optics Market?
The Co-packaged Optics Market size is expected to reach USD 118.76 million in 2025 and grow at a CAGR of 37.10% to reach USD 575.32 million by 2030.
What is the current Co-packaged Optics Market size?
In 2025, the Co-packaged Optics Market size is expected to reach USD 118.76 million.
Who are the key players in Co-packaged Optics Market?
Ayar Labs Inc., Broadcom Inc., Cisco Systems Inc., IBM Corporation and Intel Corporation are the major companies operating in the Co-packaged Optics Market.
Which is the fastest growing region in Co-packaged Optics Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2025-2030).
Which region has the biggest share in Co-packaged Optics Market?
In 2025, the North America accounts for the largest market share in Co-packaged Optics Market.
What years does this Co-packaged Optics Market cover, and what was the market size in 2024?
In 2024, the Co-packaged Optics Market size was estimated at USD 74.70 million. The report covers the Co-packaged Optics Market historical market size for years: 2020, 2021, 2022, 2023 and 2024. The report also forecasts the Co-packaged Optics Market size for years: 2025, 2026, 2027, 2028, 2029 and 2030.
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Co-packaged Optics Industry Report
Statistics for the 2025 Co-packaged Optics market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Co-packaged Optics analysis includes a market forecast outlook for 2025 to 2030 and historical overview. Get a sample of this industry analysis as a free report PDF download.
