June 19 — The rise of artificial intelligence is likely to accelerate adoption of co-packaged optics, benefiting a broad swath of chip and component suppliers including Broadcom (AVGO, Financial) and Nvidia (NVDA, Financial), according to a note from J.P. Morgan on Wednesday.
Co-packaged optics, or CPO, integrates optical and silicon components on a single substrate to address growing challenges in bandwidth, power efficiency, and cost. The technology, once viewed as a long-term bet, is now drawing more attention due to AI-related infrastructure demands, the analysts said.
J.P. Morgan's Samik Chatterjee said that while technical obstacles such as thermal management and serviceability remain, progress on those fronts and the strain on existing technologies have started to shift sentiment toward CPO. Commercial traction may begin earlier than expected, with market value projected to exceed $5 billion by 2030.
The firm sees multiple beneficiaries of this trend, including Advantest (ATEYY, Financial), ASMPT (ASMVF, Financial), Coherent (COHR), Corning (GLW, Financial), Fabrinet (FN, Financial), Lumentum (LITE, Financial), Marvell Technology (MRVL, Financial), Taiwan Semiconductor (TSM, Financial), United Microelectronics (UMC, Financial), and Cisco Systems (CSCO, Financial), which is ramping investments.
Despite disruption fears, existing optical suppliers are still expected to play a central role in the CPO ecosystem, according to the analysts.
