TrendForce: Nvidia and Broadcom begin small-scale shipments of CPO switches; optical engine yield and advanced packaging capacity become key factors

```

Co-Packaged Optics (CPO) technology is approaching a commercialization inflection point, but the supply capacity of core components will determine the direction of the market landscape.

According to TrendForce, NVIDIA's next-generation Spectrum-X CPO switches have begun shipping to some partners, and Broadcom's 51.2T Bailly CPO switches are also being shipped in small quantities, marking the entry of co-packaged optics (CPO) technology into the mass production stage. This technological breakthrough represents a key step towards building next-generation high-bandwidth data center infrastructure.

However, the start of mass production does not mean the end of supply bottlenecks. TrendForce points out that the supply capacity of core components such as optical engines, silicon photonic chips, and advanced packaging will become key variables restricting the speed of CPO switch expansion, directly impacting the competitive landscape of related industry chain vendors during the market ramp-up cycle from 2027 to 2028.

Facing supply chain pressure, major players such as NVIDIA and Google have adopted differentiated strategies. The trend toward vertical integration is increasingly evident, and companies able to independently control core resources are expected to gain a first-mover advantage in the next round of competition.

Flagship Products Launched, Accelerating the Commercialization Process of CPO

NVIDIA’s Spectrum-X CPO switch, developed in cooperation with TSMC, uses COUPE advanced packaging process and has a processing capacity of 400 Tb/s. TrendForce expects its production capacity to further expand in the second half of 2026.

Broadcom’s 51.2T Bailly CPO switch was brought into mass production with assistance from partners Delta Electronics and Micas Networks. Compared to traditional pluggable optical transceiver modules, this product can reduce power consumption by up to 70%. Hyperscale cloud providers like Meta have completed deployment validation, indicating initial confirmation of its feasibility in actual data center environments.

CPO technology integrates optical components around switch ASICs, greatly improving bandwidth while reducing power consumption. It is regarded as the core development direction for next-generation high-bandwidth switches. The launch of two flagship products signifies that CPO is moving from technical validation to large-scale commercialization.

Three Bottlenecks Restricting Expansion, Structural Supply Chain Pressure

Despite the start of mass production, TrendForce observes three core restrictions facing the CPO switch supply chain.

First is the optical engine segment. Optical engines must integrate lasers, modulators, and other components; the manufacturing process is complex and requires high yield rates. Coupled with heat management challenges, currently only a few suppliers have mass production capabilities, resulting in limited supply elasticity.

Second is the long construction cycle for silicon photonics capacity. Silicon photonics wafer foundry and subsequent packaging demand extremely high precision and reliability, and capacity expansion cannot quickly respond to growing demand in the short term, creating structural supply constraints.

Third is intensified competition for advanced packaging capacity. CPO switches depend heavily on advanced packaging processes like COUPE, but AI chips and HPC applications are also competing for similar packaging capacity, causing ongoing resource compression in the CPO supply chain. The combined effect of these three bottlenecks brings considerable uncertainty to the pace of CPO switch expansion.

Divergent Strategies Among Leading Players, Vertical Integration Becomes the New Normal

Facing supply chain pressure, leading companies’ responses are clearly diverging. Some cloud giants are locking in supply through long-term procurement agreements and strategically investing in upstream silicon photonic vendors to secure core resources ahead of time. NVIDIA is deepening cooperation with TSMC, which holds advanced packaging capacity, to advance vertical integration. Google and other vendors are accelerating self-development of optical components to reduce reliance on external suppliers.

TrendForce expects vertical integration to become the new industry norm. Companies able to independently control silicon photonics design, optical engine manufacturing, and advanced packaging resources will gain a leading edge in the 2027–2028 CPO switch market ramp-up cycle, while those reliant on external procurement may face greater cost pressures and delivery risks during periods of supply tightness.

Risk Disclosure and DisclaimerThe market involves risks, and investment should be cautious. This article does not constitute individual investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular situation. Investments made accordingly are at your own risk. ```