AI data center optical interconnect demand accelerates, CPO penetration rate expected to reach 35% by 2030

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Nvidia's strategic deployment in next-generation AI computing architecture is accelerating the shift of optical interconnect technology from the edge to the core of data centers.

On March 11th, according to the latest research from TrendForce, as the scale of AI clusters continues to expand, the physical bottleneck of copper cable transmission is becoming increasingly evident, and the strategic importance of optical transmission technology in data centers is significantly rising.

TrendForce predicts that the penetration rate of Co-Packaged Optics (CPO) in optical communication modules for AI data centers will steadily climb, reaching about 35% around 2030.

However, Broadcom previously pointed out that although optical transmission is a long-term replacement trend, its core SerDes chip technology is continuously breaking through the physical limits of copper cables. Thanks to significant advantages in cost and power consumption, Broadcom believes copper-based solutions will remain the absolute leader in the short-distance interconnect market inside data centers at least until 2028.

Wallstreetcn mentioned that Nvidia last week announced investments of $2 billion each in Lumentum and Coherent, totaling $4 billion, and signed multi-year procurement agreements to prioritize securing supply of advanced laser and optical devices.

This move is seen as Nvidia's important layout in key optical components and also indicates that the dependence of AI computing infrastructure on optical technology will continue to deepen in the future.

Copper cables reach physical limits; demand for optical transmission accelerates release

TrendForce points out that when chip interconnect scale expands from single rack to inter-rack deployment—such as a 576-GPU cluster composed of eight Nvidia NVL72 systems—copper cable interconnect will be unable to meet required performance and bandwidth demands.

The Nvidia NVLink 6 communication protocol defines a per-channel transmission rate of 400G SerDes, with a single GPU bandwidth limit of up to 3.6 TB/s. At this extreme transmission rate, the electrical signal of copper cables decays rapidly with distance, compressing the effective transmission range to less than one meter.

Additionally, the competitiveness of optical transmission centers on Wavelength Division Multiplexing (WDM) technology. This technology allows multiple wavelength signals to be transmitted simultaneously in a single optical fiber, greatly increasing transmission density—a fundamental advantage unattainable by copper cable solutions.

Nvidia's technical route in CPO and silicon photonics adopts TSMC's COUPE 3D packaging technology, stacking and integrating logic chips and photonic chips. On the silicon photonic chip, a 200G PAM4 micro-ring modulator (MRM) is integrated to boost optical engine bandwidth density while controlling volume and power consumption.

Meanwhile, multiple major cloud service providers are working with emerging startups to actively develop new optical interconnect solutions, preparing for the next round of bandwidth demand and laying the foundation for large-scale commercialization of CPO technology.

CPO commercialization process: Phased advancement from large-scale interconnect to intra-rack deployment

TrendForce expects that silicon photonics and CPO-based optical interconnect technology will first be used for inter-rack (scale-out) data transmission in Nvidia's Rubin generation, with plans to integrate it into future intra-rack (scale-up) interconnect architectures.

In the near term, the proportion of CPO in optical transceiver modules for AI data centers is expected to be only about 0.5% in 2026.

Looking further ahead, as silicon photonics and CPO packaging technologies mature, TrendForce believes that scale-up optical interconnect solutions spanning multiple racks may first appear in the Rubin Ultra or Feynman generation.

Around 2030, the penetration rate of silicon photonics-based CPO solutions is expected to reach about 35%. TrendForce also notes that new optical technologies, including advanced optical interconnect architectures and optical I/O, may emerge during this period.

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