An optical lens supplier has turned down a request from Apple to increase orders for variable aperture lenses intended for the iPhone 18 Pro, citing a strategic focus on Co-Packaged Optics (CPO) business. This type of refusal is highly unusual within Apple's supply chain.
Reports indicate that Apple approached Largan Precision with a request to boost the supply of variable aperture lenses, which the supplier explicitly declined. Largan Precision stated that the company is currently concentrating its resources on CPO technology. This technology involves integrating optical transceivers directly into the System-on-a-Chip (SoC) package, which can shorten electrical pathways, thereby reducing latency and thermal losses.
Given its massive market presence, Apple typically dictates production schedules to its suppliers, who rarely refuse its demands. Apple's proactive move to seek additional orders itself signals optimism about the sales prospects for the iPhone 18 series. The supplier's uncommon refusal, however, highlights the growing strategic appeal of the CPO sector.
Largan Precision's strategic choice aligns with the rising market enthusiasm for CPO technology. Since April 1, the Wind CPO Index has surged by over 26%. During the same period, Zhongji Innolight, a leading domestic CPO player, has seen its stock price climb nearly 30%, repeatedly hitting record highs and becoming one of the most watched segments in the technology sector.
**Betting on CPO, Voluntarily Forgoing Apple Orders**
The core rationale behind Largan Precision's rejection of Apple's request lies in its strategic bet on the CPO sector. CPO technology, which deeply integrates optical transceivers with chip packaging, can significantly reduce transmission latency and energy consumption in data centers and high-performance computing scenarios. It is regarded as a critical direction for the next generation of optical interconnect architecture.
It is noteworthy that Largan Precision was a secondary supplier for the variable aperture lenses in the iPhone 18 Pro, with Sunny Optical Technology serving as the primary supplier. This means the practical impact of Largan's refusal on Apple's overall supply rhythm is limited. Nevertheless, the underlying signal—that a core supplier is actively prioritizing its CPO business over orders from Apple—remains highly significant for the market.
**CPO Commercialization Accelerates Amid AI Infrastructure Wave**
Driven by the wave of upgrades in cloud AI infrastructure, the commercialization of Co-Packaged Optics (CPO) technology continues to attract significant market attention. According to a recently released in-depth report on the optical module industry from West Securities R&D Center, the commercialization of CPO is accelerating noticeably, propelled by leading manufacturers like NVIDIA and Broadcom.
CPO fundamentally alleviates bottlenecks in traditional data center network architectures at the physical layer by integrating the optical engine and the switch ASIC chip on the same substrate within a single package. Its core advantages are evident in three key areas:
1. **Significant Power Reduction:** CPO achieves over 50% better energy efficiency compared to traditional DSP-based optical modules. NVIDIA's Q3450 CPO consumes only 4-5 watts per 800G bandwidth, representing a 73% reduction in power consumption. 2. **Overcoming Copper Cable Expansion Limits:** CPO supports cross-rack scaling. The NVIDIA Spectrum 6800 switch can theoretically connect up to 131,072 GPUs. 3. **Improved Signal Integrity:** The electrical signal transmission distance is reduced from 15-30 centimeters to just tens of millimeters. The Mean Time Between Failures (MTBF) reaches 2.6 million hours, far exceeding the 0.5-1 million hours typical of pluggable modules.
As the demands for bandwidth and energy efficiency from AI model training and inference continue to grow, data centers' need for high-speed optical interconnect solutions is expanding rapidly. The industrialization of CPO as a next-generation solution is consequently speeding up. An optical lens supplier's decision to shift resources towards CPO at this juncture is a clear reflection of the high confidence that companies within the supply chain have in the long-term growth potential of this sector.
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