Power consumption drops by 95%, breaking the trade-off dilemma between optical and copper... Could Micro LED CPO be the ultimate solution?

Power consumption drops by 95%, breaking the trade-off dilemma between optical and copper... Could Micro LED CPO be the ultimate solution?

Generative AI is pushing data center interconnects toward 800Gbps, 1.6Tbps, and even higher bandwidths, while traditional copper cables are reaching their limits in energy consumption, density, and heat dissipation. Micro LED CPO enters the scene with "lower unit energy consumption + higher integration," becoming an important variable for the capital market to repricing interconnect technology routes. However, the distance from a "final solution" still depends on mass production packaging, reliability, and customer adoption pace.

On March 5, the Micro LED concept stocks on the A-share market surged significantly. Many component stocks such as Jucan Optoelectronics, Lianjian Optoelectronics, and Absen hit their price limit, with market attention focused on new alternative paths for high-speed data center interconnects.

According to the latest survey from TrendForce, the transmission speed of large data centers worldwide has generally reached 400Gbps, and since 2025, demand is upgrading toward 800Gbps and 1.6Tbps. The report points out that copper cable solutions are facing challenges in transmission density and energy saving, while Micro LED CPO has lower unit transmission energy consumption, is expected to become an alternative solution for optical interconnects, and can rewrite the cost and power trade-offs of "optics and copper" in short-distance interconnect scenarios.

Notably, a report from TF Securities last year cited Microsoft's research team and Azure's MOSAIC solution, which attempts to break the dilemma between optics and copper using Micro LED’s “wide and slow” architecture, and pointed out that adoption of CPO technology could amplify the system-level power advantage of Micro LED links.

The shortfalls of copper cables are exposed, energy consumption and distance become expansion bottlenecks

TrendForce believes that the large-scale deployment of generative AI moves data centers into a compute-intensive era, accelerating upgrade speed for interconnect bandwidth. With transmission speeds evolving toward 800Gbps and above, high-frequency losses and system energy consumption in copper cables are becoming harder to ignore.

Energy consumption pressure is directly transferred to operations. TrendForce data shows that with transmission speed at 1.6Tbps, traditional copper cables have unit transmission energy consumption of over 10pJ/bit, and the corresponding optical transceiver module power consumption can reach about 30W, which drives up operating costs and brings thermal pressure.

The report also notes that the energy consumption cost in data centers accounts for more than 30% of operating costs, of which the transmission system consumes nearly 20%, making interconnect energy efficiency one of the key constraints for continued expansion of compute clusters.

TF Securities further emphasizes in its report that there is a fundamental trade-off between transmission distance, power consumption, and reliability in link technology. Copper cable links are highly efficient and reliable, but their transmission distance is extremely limited (<2m). Even with active copper cables, the distance is only expected to rise to 5-7m, and further bandwidth increases will intensify the challenges.

Core selling point of Micro LED CPO: unit energy consumption reduced to 1-2pJ/bit

Against the backdrop of "bandwidth leap + rigid energy consumption," TrendForce positions Micro LED CPO as a route with replacement potential. The key is deep integration of Micro LED chips under 50 microns with CMOS drive circuits, and co-packaging of optical devices with switch chips and drive circuits in a CPO architecture to shorten signal paths, reduce losses, and enhance stability.

TrendForce research shows Micro LED CPO unit transmission energy consumption can drop to 1-2pJ/bit, only 5% of the traditional copper cable solution. For example, in 1.6Tbps optical communication products, traditional optical transceiver module power consumption is about 30W, while overall power consumption under Micro LED CPO architecture can be reduced to about 1.6W, a reduction of nearly 95%, which has direct significance for data center cooling and cabinet power density constraints.

Density and reliability are also reasons this solution is being bet upon. TrendForce points out that Micro LED chips feature long lifespan, fast response, and strong anti-interference capabilities. Combined with the high integration of CPO, transmission density of over 0.5Tbps/mm² can be achieved, saving cabinet space and better meeting high-density deployment needs.

From MOSAIC to CPO: Pluggable validation and system-level power reduction path

TF Securities’ report cites Microsoft's research team and Azure’s MOSAIC solution, proposing Micro LED as the emitter and CMOS sensor as the receiver, using WaS (wide-and-slow) architecture to replace a few high-speed channels with many parallel low-speed channels, thereby reducing reliance on lasers, ADC/DACs, complex DSPs, and FEC.

The report says the Microsoft team built an end-to-end prototype system with 100 channels, each at 2Gbps, and tests showed MOSAIC could maintain stable transmission capability within 30 meters, with simulation data pointing to distances over 50 meters. In terms of power consumption, prototype link data indicates MOSAIC’s digital backend is only 0.4W, total end is about 3.1-5.3W, while mainstream optical links are 9.8-12W.

MOSAIC also brings the approach of “adding channels, lowering single-channel rates” to the table. At 2Gbps/channel, 800Gbps one-way requires about 400 Micro LED channels, not including redundancy. With light ECC, the number of channels can rise to 460, and additional hot standby channels can be configured to enhance reliability. TF Securities also points out that if CPO technology is adopted, MOSAIC will see even greater benefits, because inter-chip data rates are lower and can directly drive Micro LED modulation, reducing the power and complexity arising from high-speed conversions.

Industry focus: Epitaxy and chips, mass transfer, advanced packaging and optics

If Micro LED CPO goes toward commercialization, the incremental value is not limited to “light source replacement,” but also relates to systemic pulling on manufacturing and packaging capability. Three high-sensitivity links demand attention: upstream epitaxial wafer and chips, midstream mass transfer and advanced packaging, and supporting optics and receiving devices.

  • As a domestic leader in compound semiconductors, Sanan Optoelectronics owns the largest Micro LED epitaxial wafer capacity in China, has built a 6-inch mass production line, and its subsidiary Sanan Integrated has optical communication chip foundry capabilities, with related products now entering validation stage with top customers.
  • HC SemiTek is described as a top-tier domestic Micro LED chip technology company, owning the world’s first 6-inch Micro LED mass production line, with yield above 90%. Its optical communication samples for short-distance AI server interconnects are already sent for validation by leading customers.

From the component dimension, TF Securities believes that if the MOSAIC solution takes off, Micro LED, multi-core imaging fiber, TIR lens, CMOS sensor, and Micro LED optical connector will be major beneficiaries.

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