Near-Packaged Optics (NPO) Gains Traction as Interim Solution Before Co-Packaged Optics (CPO)

The Rise of Near-Packaged Optics

Near-packaged optics (NPO) is gaining attention as a transitional technology in optical networking. SemiAnalysis highlighted NPO's benefits, including field-replaceable modules, a contained failure radius, and simplified assembly, as the optical engine is packaged separately from the switch ASIC. This architecture positions NPO as a bridge solution while the industry moves towards full co-packaged optics (CPO).

Industry Shift and Market Impact

SemiAnalysis previously adjusted its CPO volume expectations, pushing scale-out networks to 2027 and full-scale production to 2028 or 2029. This revised outlook negatively impacted stock prices for companies like Applied Optoelectronics and Lumentum. NPO stands to benefit from this extended timeline for CPO adoption, as it offers a viable alternative in the interim.

NPO Technology and Standardization

NPO positions the optical engine close to the switch ASIC but on its own substrate, allowing for a shorter electrical path and the elimination of the digital signal processor (DSP). This design enables the module to be socketed and field-replaceable, unlike CPO, where the engine is reflowed onto the ASIC's substrate. Broadcom demonstrated a 3.2T VCSEL-based NPO product at OFC 2026, and a consortium of six companies is working to define a common socket standard for NPO devices.

Comparison with Other Optical Architectures

Traditional front-panel pluggable transceivers have a significant copper trace distance from the ASIC, requiring a DSP that consumes 6W to 8W of an 800G module's 14W to 17W budget. CPO reduces this distance to millimeters, eliminating the DSP and enabling substantial power reductions, such as Broadcom's reported 70% reduction for its co-packaged Tomahawk switches. NPO offers a middle ground, reducing power consumption by eliminating the DSP while maintaining modularity. Linear pluggable optics (LPO) is another interim solution that removes the DSP but keeps optics in a standard front-panel module, reducing power but potentially impacting reach and interoperability.