The market for co-packaged optics (CPO) and near-packaged optics (NPO) is expected to grow from around 100 million dollars in 2025 to more than 39 billion dollars by 2030, according to Trendforce. That’s on top of the pluggable optical transceivers, which by that year will represent a nearly 26-billion-dollar market.
Trendforce argues that optical interconnects are becoming a critical enabler of AI factory expansion as hyperscalers struggle with rising power consumption, denser racks and larger compute clusters. As a result, connectivity is increasingly being treated as strategically important as GPUs and other compute hardware, resulting in a scramble for key components including indium phosphide lasers, photodetectors, materials and optical fiber.
The shift is driven by the limitations of copper interconnects as data rates move from 100 Gb/s to 200 Gb/s and eventually 400 Gb/s per lane. Signal loss, power consumption and compensation costs are pushing data center operators toward optical architectures that bring photonics closer to switch ASICs.
Among the available options, NPO is emerging as the preferred medium-term solution because it combines lower power consumption with modularity and multi-vendor flexibility. CPO is seen as the longer-term destination for applications demanding maximum integration, power density and performance.
