IEDM2024|Analysis of Development Delays and Market Drivers for Co-Packaged Optics (CPO)

Current Market Landscape

Despite the technical advantages of co-packaged optics (CPO), deployment still faces a variety of challenges. Understanding these factors and the market drivers is crucial for grasping the trajectory of technology adoption [1].

Competing Technology Analysis

The emergence of linear pluggable optics (LPO) presents significant challenges to the rapid adoption of CPO.

Figure 1 compares traditional pluggable optics with LPO architecture, illustrating the removal of the DSP from the optical module.

LPO's simplified architecture reduces power consumption and lowers implementation complexity. Compatibility with existing infrastructure and lower initial investment requirements make LPO an attractive near-term alternative. These advantages have led some organizations to reconsider their immediate CPO deployment plans.

Challenges in Market Adoption

Figure 2 shows LightCounting’s forecast for CPO adoption through 2028, illustrating the evolution of market expectations.

CPO adoption faces several major hurdles. Initial deployment forecasts have been revised downward, reflecting the complexities of transitioning to this new technology. Meta’s decision to skip large-scale 400G deployment and leap from 200G directly to 800G indicates a cautious market stance.

Technical Implementation Barriers

Figure 3 compares implementation characteristics across retimed pluggables, linear-drive pluggables, and linear-drive CPO, highlighting relative technical and ecosystem maturity.

Technical factors continue to affect deployment timelines. The complexity of thermal management presents significant engineering challenges, while manufacturing yield concerns limit production scalability. Testing and validation requirements add further complexity, and system integration challenges must be addressed through careful design and implementation strategies.

Cost Considerations

Figure 4 illustrates key cost indicators associated with CPO.

The economic landscape for CPO deployment involves multiple factors. Initial infrastructure investments can be substantial, and process development for manufacturing demands significant resources. Testing and certification costs increase total expenditure, and establishing a reliable supply chain requires long-term commitment and investment.

Development of the Industry Ecosystem

Figure 5 illustrates the development of the CPO ecosystem and the interrelations among industry players.

Building a mature industry ecosystem requires coordinated efforts across multiple domains. Standardization efforts must progress in tandem with supply chain maturity to ensure interoperability and reliability. Manufacturing infrastructure demands significant investment and development time, and cultivating technical expertise throughout the industry is essential. These interrelated requirements form a complex dependency network that influences deployment timelines.

Market Drivers and Opportunities

Despite deployment challenges, several market factors continue to drive the growth of CPO.

Figure 6 presents growth forecasts across different application domains.

Data center capacity expansion continues to drive the demand for improved interconnect solutions. The rise of AI and machine learning workloads imposes higher system bandwidth and efficiency requirements. Energy efficiency regulations incentivize the adoption of low-power technologies, and the demand for bandwidth density continues to climb. Together, these factors sustain momentum for CPO development.

Alternative Technologies and Approaches

Figure 7 displays various alternative approaches for optical interconnect implementation.

As CPO continues to develop, the market is also exploring multiple parallel solutions. Advanced pluggable optics offer incremental improvements to existing architectures, while hybrid integration strategies aim to combine the strengths of different technologies. Novel packaging techniques address specific implementation challenges, and enhanced electrical solutions remain competitive for short-reach applications.

Evolving Performance Requirements

Figure 8 shows the evolving performance demands for data center interconnects.

System requirements continue to rise across multiple dimensions. Bandwidth expansion necessitates higher data rates and channel counts. As system scale increases, power efficiency demands become more stringent. Reducing latency remains critical for many applications, and integration density must increase to accommodate growing bandwidth within limited space.

Supply Chain Considerations

Figure 9 illustrates the supply chain complexities associated with CPO implementation.

Establishing a reliable supply chain is a fundamental challenge for CPO deployment. Material sourcing must address both availability and quality requirements, while developing manufacturing capabilities requires substantial investment and expertise. Quality control processes must evolve to meet new technical challenges, and as production volumes scale, logistics optimization becomes increasingly vital.

Conclusion

The deployment of CPO technology is shaped by a complex interplay of technical, economic, and market factors. While there are challenges in manufacturing, testing, and ecosystem development, strong market drivers continue to push the technology forward. The success of CPO deployment will depend on addressing these challenges while maintaining focus on its technological advantages.

Understanding these factors helps inform realistic deployment timelines and strategies. The industry's ability to resolve technical obstacles, establish a mature supply chain, and meet market demands will determine the pace of CPO adoption. As technology matures and the ecosystem develops, deployment is expected to accelerate in application areas where CPO’s advantages clearly outweigh its implementation challenges.

The path forward requires sustained investment in resolving technical issues while building the necessary industry infrastructure. Success will hinge on balancing technological excellence with practical considerations in manufacturing and deployment. As early deployments provide experience, many current challenges will be addressed, potentially accelerating the adoption of subsequent technological generations.

Reference

[1] C. Schow, "Co-Packaged Photonics for Improved Energy Efficiency and Performance of AI Applications," in IEEE International Electron Devices Meeting (IEDM), Tutorial 3, San Francisco, CA, USA, Dec. 2024, pp. 1-62, Department of Electrical Engineering, University of California Santa Barbara, Santa Barbara, CA, USA.