Co-packaged optics technology has reached a commercialization inflection point, but the supply capacity of core components will determine the competitive landscape.
According to industry monitoring, NVIDIA's next-generation Spectrum-X CPO switches have begun shipping to select partners, while Broadcom's 51.2T Bailly CPO switches continue to ship in small volumes, marking the official entry of co-packaged optics (CPO) technology into mass production. This technological breakthrough represents a critical step forward in the construction of next-generation high-bandwidth data center infrastructure.
Key start points
However, the start of mass production does not mean supply bottlenecks have been eliminated. The supply capacity of core components, including optical engines, silicon photonics chips, and advanced packaging, will become a key variable limiting the expansion speed of CPO switches, directly impacting the competitive dynamics of related supply chain companies during the market ramp-up period from 2027 to 2028.
Facing supply chain pressures, leading players like NVIDIA and Google have adopted differentiated strategies, with a clear trend toward vertical integration. Companies that can control core resources internally are expected to gain a first-mover advantage in the next round of competition.
Two flagship products are now being deployed, accelerating the commercialization of CPO. NVIDIA's Spectrum-X CPO switch, developed in collaboration with TSMC, uses COUPE advanced packaging technology and handles up to 400 Tb/s. Its production capacity is expected to expand further in the second half of 2026.
Broadcom's 51.2T Bailly CPO switch is being brought to mass production with the help of partners Delta Electronics and Micas Networks. This product reduces power consumption by up to 70% compared to traditional pluggable optical transceivers. Hyperscale cloud providers like Meta have completed deployment validation, confirming its feasibility within real-world data center environments.
By integrating optical components around the switch ASIC, CPO technology significantly increases bandwidth while reducing power consumption, making it a core development direction for next-generation high-bandwidth switches. The successive launch of these two flagship products signals CPO's transition from technical validation to full-scale commercialization.
Three major bottlenecks create structural supply chain pressure
Despite the start of mass production, the CPO switch supply chain faces three core constraints. The first is the optical engine segment. Optical engines must integrate lasers, modulators, and other components. The manufacturing process is complex with extremely high yield requirements, and thermal management challenges persist. Only a handful of suppliers currently have the capacity to mass-produce, leading to significant supply inflexibility.
The second constraint is the long lead time for building silicon photonics capacity. Silicon photonics wafer foundry and backend packaging demand high precision and reliability, making it impossible to quickly scale up capacity in response to rising demand, creating a structural supply constraint.
The third constraint is intensifying competition for advanced packaging capacity. CPO switches rely heavily on advanced packaging processes like COUPE, but AI chips and high-performance computing applications are also vying for the same packaging capacity, continuously squeezing CPO supply chain resources. These three bottlenecks compound each other, introducing significant uncertainty into the pace of CPO switch capacity expansion.
Leading companies diverge in strategy, vertical integration becomes the new norm
Facing supply chain pressures, leading companies' response strategies are clearly diverging. Some cloud giants are securing supply through long-term purchase agreements and making strategic investments in upstream silicon photonics suppliers to lock in core resources early. NVIDIA, on the other hand, is deepening its collaboration with TSMC, which controls advanced packaging capacity, to pursue vertical integration. Google and other companies are accelerating the development of in-house optical components to reduce reliance on external suppliers.
Vertical integration is expected to become the new industry standard. Companies that can independently control silicon photonics design, optical engine manufacturing, and advanced packaging resources will gain a competitive edge during the CPO switch market ramp-up period from 2027 to 2028. In contrast, companies that rely on external procurement may face greater cost pressures and delivery risks during periods of supply tightness.
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