Research: CPO and NPO Market to Surpass $39 Billion by 2030

TrendForce's latest silicon photonics industry report indicates that interconnect architecture has become a strategic asset determining the expansion speed, energy efficiency, and supply chain control of AI factories. As a result, the market size for co-packaged optics (CPO) and near-packaged optics (NPO) is projected to surge from approximately $100 million in 2025 to over $39 billion by 2030.

With the rapid expansion of AI training and inference demands, AI data centers are evolving toward higher power consumption, greater density, and larger-scale clusters. The massive energy consumption caused by data movement has prompted cloud service providers (CSPs) to elevate interconnect technology to a strategic level equal to computing technology.

As data transmission rates advance from 100 G/lane to 200 G/lane and continue toward 400 G/lane, the limitations of traditional copper wiring—such as signal loss, compensation costs, and power consumption—are becoming increasingly apparent. Bringing optical transmission closer to switch chips, shortening electrical paths, and reducing system power consumption have become core challenges in next-generation AI data center design. Consequently, three major technological approaches—linear pluggable optics (LPO), NPO, and CPO—are simultaneously gaining industry attention.

Analyzing deployment strategies among cloud service providers, near-packaged optics (NPO) remains the preferred transitional solution for most in the near to mid-term. Its advantages include shortened electrical transmission distances and lower power consumption, while maintaining modularity, repairability, and competitive flexibility across multiple suppliers. Chinese CSPs such as Alibaba and Tencent have positioned NPO as their near-term core strategy and are promoting related open standards through the Open Data Center Committee of China Communications.

Meta, parent company of Facebook, and Microsoft are prioritizing early deployment of NPO, advancing an open interconnect ecosystem through the Optical Compute Interconnect Multi-Source Agreement (OCI-MSA). Amazon is adopting a multi-supplier strategy, collaborating with STMicroelectronics on NPO development.

In contrast, co-packaged optical modules (CPO) are better suited for high-power, high-density, and highly integrated applications in the medium to long term. Within the NVIDIA ecosystem, some small to mid-sized CSPs prefer integrated AI system-level co-packaged optical module solutions, primarily due to considerations around system integration capability, delivery efficiency, and platform consistency.

However, TrendForce notes that for CPO modules to achieve mass production, challenges such as yield, repairability, fiber connector standardization, and laser supply must still be overcome. Some CPO switches require integration of numerous optical engines, posing significant yield challenges for entire systems. Additionally, detachable fiber connector solutions are still under parallel development, resulting in a landscape of diverse and competing technologies.