Five Key Trends of Co-Packaged Optics in 2026

Trend 1: Power Consumption Reduction

• 60% of data center energy is spent on data movement, not compute
• CPO reduces power per bit to sub-picojoule levels
• Nvidia testing showed link power drops 30W → 9W transitioning from pluggable transceivers to CPO in 1.6T networks
• This is the primary driver for CPO adoption

Trend 2: UCIe Optical Extensions

• UCIe optical will redefine packaging boundaries
• Optical interconnects enable boards and racks to function as architecturally continuous extensions of the package
• Ayar Labs TeraPHY delivers 8 Tbps bandwidth per chiplet
• Breaks the copper wall at package edge

Trend 3: Thermal Management Challenges

• Photonic ICs are temperature-sensitive — wavelength drift, laser efficiency degradation
• New thermal coupling dynamics when co-packaged with high-power logic dies
• Must manage spatial thermal gradients across the package
• Critical blocker for production readiness

Trend 4: Manufacturing & Testing Transformation

• Optical alignment requires micron-scale precision — far exceeding electrical tolerances
• Need automated, production-scale test methodologies
• Both optical and electrical domains must be tested together
• Test scalability is a major bottleneck

Trend 5: Standards & Ecosystem Development

• CPO supply chain remains immature
• OIF establishing modulation formats and benchmarks
• Interoperability across vendors remains a key challenge
• Ecosystem must mature before volume deployment

Source: Five Key Trends of CPO in 2026 — Siemens, February 2026