CPO hurdles linger as 800G and 1.6T SiPh surge, says analyst

Despite ongoing challenges in packaging optical components (CPO), the rapid advancement of 800G and 1.6T silicon photonics technologies remains unstoppable. This trend reflects the surging demand for high-speed interconnects in AI data centers, fundamentally reshaping the entire optical communication supply chain. Upstream material and equipment vendors will gain early traction, while midstream packaging firms face capacity strain, and downstream server and networking vendors accelerate module integration. Geopolitical dynamics, particularly the U.S.-China tech decoupling, are intensifying supply chain risks, especially for critical imports, pushing domestic alternatives to the forefront. Competitors may pursue vertical integration or strategic alliances to mitigate rising costs and delivery delays. Over the next 12 to 24 months, silicon photonics will become the core battleground for AI infrastructure, with CPO scalability determining the final industry structure.