"When glass substrates meet optical engines, and precision power management enables silicon photonic chips—in 2026, we officially announce our entry into CPO. This is not just an expansion of our business territory, but a strategic convergence rooted in common underlying technologies." Historic Inflection Point: CPO Moves from Concept to Mass Production In July 2026, the optical communications industry finally heard the long-awaited "starting gun." NVIDIA began shipping its next-generation Spectrum-X CPO switches to select partners, while Broadcom's 51.2T Bailly CPO switches continued small volume production—Co Packaged Optics (CPO) technology has officially transitioned from laboratory verification to commercial mass production. This is not only a victory for the technical roadmap, but also heralds the start of an entirely new industry cycle.   What is CPO and Why Does It Become an Industry Focus? In essence, CPO moves the optical module (optical engine) from the outer face of the switch into its heart, packaging it together with the ASIC switching chip. The optical engine, optical chips, and switching ASIC are all packaged on the same substrate, reducing the optical electrical interconnection distance to less than 1 cm and achieving industry best signal loss levels. Compared with traditional pluggable optical modules, CPO offers outstanding advantages. In conventional solutions, electrical signals must travel long distances across the circuit board, and as speeds exceed 1.6 Tbps they approach physical limits. CPO shortens the electrical signal transmission distance from centimeters to millimeters, dramatically reducing power consumption and latency. For example, Broadcom's 51.2T Bailly CPO switch reduces power consumption by about 70% compared with traditional pluggable optical modules. Schematic diagram of Co Packaged Optics (CPO) technology (Image source: Sina Finance)   Two Flagship Products Land, Ushering in the Mass Production  The two current landmark CPO products have both entered mass production: NVIDIA Spectrum X CPO switch, developed by NVIDIA in collaboration with TSMC using the COUPE advanced packaging process, delivers a total switching capacity of 400 Tb/s, with production capacity expected to expand further in the second half of 2026. Broadcom 51.2T Bailly CPO switch, brought to mass production with assistance from Delta Electronics and Micas Networks, has completed deployment verification by hyperscale cloud providers such as Meta, with preliminary confirmation of feasibility in real world data center environments. The successive launch of these two flagship products marks the formal transition of CPO from technology validation to scaled commercialization. NVIDIA Spectrum X CPO Switch (Image source: Apple Daily News)   Market Outlook: A Multi Billion Dollar Blue Ocean Accelerates Several authoritative institutions have issued highly optimistic forecasts for the CPO market: Yole Group's July 2026 report "Data Center Co packaged Optics 2026" states that CPO has moved from concept to commercial reality, with development speed and scale far exceeding 2023 expectations. Global CPO optical engine revenue will grow at a CAGR of approximately 228% from 2026 to 2031, reaching US$112 billion by 2031. Light Counting projects that the AI driven optical transceiver and CPO market will reach US$16.5 billion in 2025 and surge to US$26 billion in 2026, an annual growth rate of 60%. Trend Force forecasts that CPO penetration will rise from about 0.55% in 2026 to about 8% in 2028, corresponding to a market size of approximately US$3.3 billion. Other data show that the global CPO market will reach US$2 billion in 2026, up more than 400% year on year; the Chinese market will exceed RMB 10 billion, with growth surpassing 500%. Goldman Sachs, in its latest research report, raised its forecast for the global optical module market, projecting US$50.9 billion in 2026 and US$72.6 billion in 2027. The Yole report specifically notes that Scale Up is the "killer application" for CPO—copper interconnects have reached physical limits under the trend of doubling bandwidth, making CPO the only viable path to achieving larger scale GPU clusters. Scale Up switch optical engines and compute optical engines together account for about 94% of the market, representing the largest revenue source. Image source: Yole Group, "Data Center Co packaged Optics 2026"   Three Major Bottlenecks: Mass Production Is Only the Beginning Mass production does not mean supply bottlenecks are eliminated. TrendForce notes that the CPO switch supply chain faces three core constraints: First, the optical engine segment. Optical engines require the integration of lasers, modulators, and many other components, with complex processes and extremely high yield requirements, compounded by thermal management challenges. Only a few suppliers currently have mass‑production capabilities. Second, silicon photonics capac