Co-Packaged Optics Market Size, Share and Growth Analysis

Updated on : October 22, 2024

Co-Packaged Optics Market Size & Growth

The co-packaged optics market size is projected to grow from USD 15 million in 2023 to USD 49 million by 2028, growing at a CAGR of 26.5% during the forecast period from 2023 to 2028.

Penetration of IoT and connected devices in education and healthcare sectors, growing investment by tech giants to develop data centers,  and introduction of ultra-high-definition video streaming are expected to propel the co-packaged optics market in the next five years. However, increased network complexity is likely to pose challenges for industry players.

The objective of the report is to define, describe, and forecast the co-packaged optics market based on type, data rates, application, and region.

Co-Packaged Optics Market Forecast to 2028

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Co-Packaged Optics Market Trends:

Driver: Growing investment by tech giants to develop data centers

The co-packaged optics market is being driven by the growth of mega data centers, which require high-speed, reliable connections between the different components of the data center. CPO provides a more efficient and cost-effective way to connect the components of mega data centers, making it an ideal solution for meeting this demand. As the number of mega data centers continues to increase, the demand for CPO is also expected to grow, driving the growth of the CPO market in the coming years.

Tech giants such as Amazon Web Services (US), Google (US), and Microsoft (US) are investing heavily in new data center facilities. In October 2022, Google (US) announced plans to open its first data center in Japan in 2023 as part of a USD 730 million investment that includes the Topaz Subsea Cable, a fiber cable connecting Japan and Canada. Active investments in the development of new data center facilities are expected to drive the growth of the co-packaged optics (CPO) market over the forecast period. Thus, the increasing infrastructure and technology development in the data center industry is driving the co-packaged optics market.

Restraint: Complicated design and fabrication process

Co-packaged optics are optical components that are integrated with electronic components such as processors and memory. They come with the challenge of having different requirements in terms of temperature, power, and packaging for electronic and optical components. Fabrication of co-packaged optics is a complex and expensive process, as it requires precise alignment and interconnection of optical and electronic components. It also demands the use of specialized equipment and materials. Due to its complicated design and fabrication process, co-packaged optics are more expensive than traditional optical transceivers, leading to limited adoption in some applications.

Opportunities: Rising deployment of 5G network

Co-packaged optics is a promising new technology that can improve the performance of 5G networks. It can enhance the performance of fronthaul links that connect the baseband unit (BBU) to the radio unit (RU) in 5G networks. CPO can also help to improve the performance of backhaul links that connect the RUs to the core network in 5G networks. These links are short, but they require high bandwidth to support the high data rates of 5G.

Overall, co-packaged optics is a promising new technology that has the potential to improve the efficiency and cost-effectiveness of 5G networks. By reducing power consumption and increasing bandwidth density, CPO can help make 5G networks more efficient.

Challenges: Increasing fiber counts per switc

Co-packaged optics switches combine optical and electronic components on a single chip, providing higher bandwidth and lower latency than traditional optical transceivers. However, such switches increase the fiber count per unit as they have more optical ports. This makes it challenging to route all fibers compactly and efficiently. To meet the demand for higher capacity switches, CPO switch ASICs can use parallel optical engines, allowing for up to 1024 fibers (four times as many as in existing solutions). However, this requires more front panel area than a 1RU switch can accommodate if MPO-16 is used at the front plate. Additionally, an external laser source (ELS) may be required, making the face plate space requirements even more complicated.

Co-Packaged Optics Market Map/Ecosystem

Co-packaged optics Market: Key Trends

The prominent players in the co-packaged optics market are Broadcom (US), Molex (US), Marvell (US), RANOVUS (Canada), Ragile Networks Inc. (US), SENKO (US), Quanta Computer Inc. (Taiwan), Furukawa Electric Co., Ltd. (Japan), among others. These companies boast mixing trends with a comprehensive product portfolio and strong geographic footprint.

Co-Packaged Optics Market Segmentation

CP0 is expected to grow at the highest CARG in the co-packaged optics market during the forecast period.

The CPO is expected to account for a significant share and grow at the highest CAGR during the forecast period. The demand for CPOs is expected to drive market growth as organizations look for ways to improve their network performance. Additionally, the increasing deployment of mega data centers is a key driver in the co-packaged optics market, as these data centers require reliable high-speed connections to transmit data between different types of equipment. The widespread use of cloud services has raised the demand for data centers, which has further fueled the industry under study.

Less than 1.6 T & 1.6 Tis expected to grow at the highest CARG in the co-packaged optics market in 2023.

The less than 1.6 T & 1.6 T segment is expected to account for a significant share during the forecast period. The demand for less than 1.6 T data rates co-packaged optics (CPO) is expected to remain strong in the coming years. This is due to the fact that many applications, such as data centers, telecommunications, and industrial automation, will have high demand. The increasing activities by market players such as MACOM and Intel Corporation are driving the growth of this 1.6 T data range.

Co-Packaged Optics Industry Regional Analysis

The co-packaged optics industry is expected to grow at the highest CAGR in India from the Asia Pacific region during the forecast period.

The Asia Pacific region continues to be a significant market for co-packaged opticss. The Asia Pacific region has witnessed significant growth in data center infrastructure due to the rising demand for cloud computing, digital services, and e-commerce. With the deployment of 5G networks in the Asia- Pacific countries, high-speed, low-latency communication links are essential. In India, the data center industry is rapidly expanding as more than half a million digital users generate and consume increasing amounts of data, with a growing preference for cloud services. India is now becoming a prime global destination for data center construction as India has become a fast-growing DC hub pursuant to a massive and growing internet user base, explosion of data, and establishment of a favorable environment through the government's Digital India initiative. Moreover, the Indian government's growing support for the data center and telecommunication industry is creating new opportunities.

Co-Packaged Optics Market by Region

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Top Co-Packaged Optics Companies - Key Market Players

Major vendors in the co-packaged optics companies include

• Broadcom (US),
• Molex (US),
• Marvell (US),
• RANOVUS (Canada),
• Ragile Networks Inc. (US),
• SENKO (US),
• Quanta Computer Inc. (Taiwan),
• Furukawa Electric Co., Ltd. (Japan), among others.

Co-Packaged Optics Market Report Scope

Co-Packaged Optics Market Highlights

This report categorizes the co-packaged optics market share based on type, data rates, application, and region.

Recent developments in Co-Packaged Optics Industry

• In March 2023, Furukawa Electric Co., Ltd. developed an 8-channel TOSA (transmitter optical sub-assembly) employing a blind mate optical connector at OFC2023, one of the largest international conferences in the optical communication market.
• In July 2023, SENKO acquired CudoForm Inc. (US), one of the leading companies in designing and manufacturing high-precision metal micro-optic components.
• In March 2023, Broadcom Inc. (US) has demonstrated its new chip, Tomahawk 5 51.2Tbps Switch Chip with eight 64-channel silicon photonic engines onboard. This new chip can power 800Gbps of traffic at 5.5W by reducing the need to electrically drive signals to pluggable optics at the front of the switch.

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