25Jun, 2025
    The Development Prospects of Optical Transceivers in the AI Era

    The explosive growth of artificial intelligence (AI) technology is reshaping the underlying logic of the global digital infrastructure. As the core transmission carrier of data centers and communication networks, the optical transceiver industry is standing in the “eye of the storm” of the AI ​​computing revolution. From the rate iteration of 800G to 1.6T, from the technological leap from traditional pluggable to CPO (co-packaged optics), optical transceivers are not only the “highways” of data transmission, but also the “blood transfusion channels” for AI large model training and reasoning. This article will deeply analyze the technological evolution, market demand and competitive landscape of the optical transceiver industry in the AI ​​era, and look forward to its future development prospects.

    AI Computing Power Demand: The Underlying Logic Driving the Iteration of Optical Transceiver Technology

    Exponential Demand for Bandwidth in Large-Model Training

    The parameter count of individual AI large models has surpassed the trillion level (e.g., GPT-4), and the computing power required for training doubles every 3-4 months, far outpacing Moore’s Law. This directly drives the upgrade of optical interconnection bandwidth within data centers from 100G to 800G/1.6T. Taking NVIDIA’s DGX H100 server cluster as an example, its internal interconnection requires a total bandwidth of at least 4.8 Tbps, with the demand for optical transceivers per single cabinet exceeding 500 units.

    Technical Challenges of Low Latency and High Energy Efficiency

    AI computing has extremely low tolerance for data transmission latency (requiring less than 100 nanoseconds), while the power consumption of traditional pluggable optical transceivers already accounts for over 30% of the total energy consumption of data centers. CPO technology, by directly packaging the optical engine with the ASIC chip, can reduce power consumption by 40% and latency by 50%, becoming the next technological high ground. According to LightCounting’s forecast, the CPO market size will exceed $5 billion by 2027.

    Commercial Breakthroughs in Silicon Photonics Technology

    Silicon photonics technology integrates lasers, modulators, and detectors through CMOS processes, significantly reducing the cost and size of optical transceivers. Companies like Intel and Cisco have already launched silicon photonics 400G transceivers, and domestic manufacturers are also accelerating mass production. Yole predicts that the market share of silicon photonics modules will increase from 20% in 2023 to over 60% by 2030.

    Market Landscape: Global Supply Chain Restructuring and Domestic Opportunities

    “Arms Race” Among North American Cloud Providers

    Tech giants such as Meta, Microsoft, and Google plan to increase the penetration rate of optical transceivers in AI data centers to 80% by 2024-2025. Taking Microsoft Azure as an example, its planned deployment of 1.6T optical transceivers will reach 2 million units by 2025, with a market size exceeding $3 billion. North American cloud providers are deeply binding with leading Chinese enterprises through the JDM (Joint Design Manufacturing) model.

    Technological Breakthroughs by Chinese Manufacturers

    With cost advantages and rapid iteration capabilities, Chinese optical transceiver enterprises have captured over 60% of the global market share. According to Omdia data, Chinese enterprises accounted for over 70% of the 800G market share in 2023.

    Supply Chain Resilience Amid Geopolitical Tensions

    U.S. semiconductor export controls on China have compelled domestic industry chain vertical integration. From optical chips, packaging materials to testing equipment, the domestic substitution rate has increased to over 50%. Meanwhile, leading companies have evaded tariff risks through overseas bases in Thailand and Malaysia, forming a global production capacity network of “Chinese design + Southeast Asian manufacturing”.

    Future Trends: From Technological Evolution to Ecosystem Competition

    The Rise of LPO (Linear Direct Drive) Technology

    Compared with CPO, the LPO solution eliminates the need for DSP chips, reducing power consumption by 20% and cost by 30%, becoming an alternative for medium- and short-distance transmission.

    Optoelectronic Integration and Intelligent Operation and Maintenance

    Optical transceivers are evolving towards intelligence, integrating functions such as temperature sensing, power consumption monitoring, and failure prediction. The concept of “autonomous driving networks” proposes dynamically optimizing the working state of optical transceivers through AI algorithms, improving data center energy efficiency by 15%.

    Standards Competition and Ecosystem Positioning

    Industry alliances have become new battlefields for competition. International organizations such as COBO (Co-Packaged Optics Alliance) lead the formulation of CPO standards, while the China Academy of Information and Communications Technology (CAICT) has taken the lead in establishing the “Optoelectronic Integration Technology Committee” to promote the implementation of domestic standards. In the next five years, whoever holds the discursive power in technological standards will dominate the trillion-dollar AI computing power market.

    Challenges and Risks

    Uncertainty in Technological Iteration

    The parallel development of multiple technological routes such as CPO, LPO, and silicon photonics may lead to risks of redundant investment. For example, if the heat dissipation and yield issues of CPO cannot be overcome, it may trigger industrial turbulence due to a shift in technological routes.

    The “Bullwhip Effect” in the Supply Chain

    Fluctuations in AI computing power demand may lead to inventory backlogs of optical transceivers. In Q4 2023, order cancellations by North American cloud providers caused some enterprises’ inventory turnover days to soar to over 120 days, exposing the fragility of demand forecasting.

    The “Gray Rhino” of Geopolitics

    The United States may include optical transceivers in the export control list or even restrict the supply of advanced optical chips to China. If domestic 25G and above DFB lasers cannot make breakthroughs, it will hinder the development of high-end products.

    Conclusion

    Under the dual revolutions of AI and computing power, the optical transceiver industry has evolved from a “supporting role” in the communications field to a strategic infrastructure for the digital economy. In the short term, the mass production of 800G and the R&D of 1.6T will spawn a new round of growth cycles; in the long term, optoelectronic integration and standards competition will define the industry’s final outcome. For Chinese enterprises, only by achieving a balance between technological innovation, supply chain resilience, and adaptation to international rules can they remain invincible in this global competition and cooperation. The future optical transceiver industry is not just a technological contest but a comprehensive game of ecosystems and strategies.

    CPO LPO
    11Jun, 2025
    LPO and CPO: A Pivotal Shift and Synergistic Evolution in Optical Interconnect Technology

    Optical transceivers, optical DSPs (oDSPs), and switch ASICs are the core components of data center optical interconnects. The emergence of LPO (Linear-drive Pluggable Optics) and CPO (Co-packaged Optics) is driving the industry toward lower power consumption and higher density.

    CPO LPO

    I. Core Component Functionality Analysis

    1. Optical Transceivers: The Bridge for Electro-Optical Conversion

    Optical transceivers are critical devices that convert electrical signals to optical signals and vice versa, widely used in data centers and telecom networks. Key functions include:

    • Electro-Optical Conversion: Laser diodes modulate electrical signals into optical signals at the transmitter; photodetectors convert optical signals back to electrical signals at the receiver.
    • Rate Adaptation: Support multi-rate standards (e.g., QSFP-DD, OSFP) from 100G to 1.6T, covering transmission distances from 50m to 2km.
    • Signal Processing: Traditional transceivers rely on DSP chips for equalization, error correction, and dispersion compensation (e.g., DSPs account for ~50% of power consumption in 400G transceivers).

    2. Optical DSP (oDSP): The “Brain” of Optical Transceivers

    oDSPs are the most valuable electrical chips in transceivers (20%-30% of BOM cost). Key roles include:

    • Modulation & Demodulation: In data center scenarios, PAM4 oDSPs use 4-level modulation to boost single-channel rates (e.g., 50G/100G) and compensate for signal distortion. In telecom long-haul scenarios, Coherent oDSPs use QPSK for high-sensitivity transmission.
    • Signal Regeneration: Digital signal processing (e.g., FEC) restores degraded signals to ensure long-distance reliability.
    • Power Consumption Challenge: In 800G transceivers, oDSPs consume ~6-8W, becoming the primary power source.

    3. Switch ASICs: The Central Hub for Data Forwarding

    Switch ASICs are the core of switches, responsible for high-speed data frame routing and forwarding. Functions include:

    • Port Interconnection: Support multi-port high-speed connections (e.g., 112G SerDes) for low-latency data exchange between servers and storage.
    • Protocol Processing: Integrate PAM4 modulation, CDR (Clock and Data Recovery), and flow control to ensure signal integrity.
    • Collaborative Optimization: In LPO solutions, ASICs assume partial signal compensation (e.g., linear equalization, clock recovery) previously handled by oDSPs.

    II. Technological Breakthroughs and Impacts of LPO & CPO

    1. LPO: Cost and Efficiency Gains in Pluggable Architectures

    Technical Features:

    • DSP-Free Design: Replaces DSPs with high-linearity Driver/TIA chips, eliminating CDR and complex digital processing to reduce power, cost, and latency in 800G LPO modules.
    • Compatibility: Retains pluggable formats (QSFP-DD/OSFP) with hot-swappable maintenance, suitable for short-reach (<2km) AI clusters and cost-sensitive scenarios.
    • Standardization Progress: Based on OIF CEI-112G-Linear-PAM4, supports partial 800G commercialization, though 224G SerDes requires further validation.

    Industry Impact:

    • Power Revolution: A rack with 100 400G LPO modules saves >¥2,000 annually in electricity costs (PUE 1.5), with reduced cooling expenses.
    • Supply Chain Shift: Reduces reliance on DSP vendors like Marvell/Broadcom, driving localization of Driver/TIA chips.
    • Scenario Limitations: Relies on switch ASICs for signal compensation, limiting competitiveness in heterogeneous networks.

    2. CPO: Performance Leap in Co-Packaged Architectures

    Technical Path:

    • Near-Packaging Evolution: From NPO (co-board optical engine) to CPO (co-packaged optical engine), reducing signal transmission distance from 10cm to millimeters, cutting power by 30%-50%.
    • Integration Morphologies: Includes Type A (2.5D), Type B (Chiplet), and Type C (3D) packaging, advancing deep integration of silicon photonics with switch ASICs.
    • Silicon Photonics Core: CPO relies on silicon photonics for high-density optical device integration, with silicon photonics expected to capture 60% market share by 2030.

    Industry Impact:

    • Performance Boost: A 1.6T CPO system supports 51.2T total bandwidth with sub-nanosecond latency, meeting AI training clusters’ ultra-high bandwidth demands.
    • Ecosystem Challenges: Initially reliant on proprietary designs (e.g., NVIDIA Quantum-X), lacking unified standards, and high O&M costs due to whole-unit replacement for optical engine failures.
    • Market Differentiation: CPO targets scale-up networks (e.g., multi-rack AI clusters), while scale-out networks still rely on pluggable modules.

    III. Future Trends and Technological Dynamics

    1. Multi-Technology Coexistence:

    • LPO Dominates Mid-Term: By 2025-2027, LPO will rapidly penetrate AI clusters and mid-sized data centers, with >8M 1.6T LPO ports expected by 2027.
    • CPO’s Long-Term Potential: Post-2030, CPO will gradually commercialize in hyperscale data centers, especially for 100T+ scenarios, as silicon photonics matures.
    • DSP Persistence: DSP solutions will remain mainstream for long-haul and heterogeneous networks, with power-optimized “Link Optimized-DSP” variants.

    2. Synergistic Innovation:

    • Silicon Photonics Fusion: Enables LPO (reduces Driver/TIA costs) and CPO (achieves high-density integration), serving as a foundational technology for both.
    • Packaging Breakthroughs: 3D packaging and TSV (Through-Silicon Vias) advance CPO to Type C, shrinking size and improving thermal efficiency.
    • Standardization: IEEE 802.3 and OIF efforts will accelerate LPO interoperability, while CPO requires open ecosystems to resolve compatibility issues.

    3. Supply Chain Restructuring:

    • Chip Vendors: Marvell/Broadcom maintain DSP dominance but face LPO competition; NVIDIA/Intel integrate silicon photonics with ASICs via CPO to strengthen system-level competitiveness.
    • Transceiver Vendors: Innolight, Eoptolink, etc., actively deploy LPO/CPO but must balance investments with market demand to avoid over-commitment.
    • Foundries: TSMC, STMicroelectronics, etc., expand silicon photonics capacity to enable CPO mass production.

    IV. Conclusion

    The emergence of LPO and CPO marks a pivotal shift from “pluggable-dominated” to “integrated-evolving” optical interconnects. LPO’s low power and ease of deployment make it a mid-term mainstream choice, while CPO’s extreme performance represents the long-term direction. Their competition will drive data center architectures toward greater efficiency and intelligence, offering opportunities and challenges for silicon photonics, advanced packaging, and other underlying technologies. In the future, synergistic development across multiple technological paths will become the norm, with standardization and ecosystem collaboration determining the pace of technology adoption.

    6Jun, 2025
    Exploring DWDM Incoherent Transmission, GIGALIGHT Leads Efficient & Economic Networking

    In this era of rapid digital transformation, high-speed, stable, and cost-effective network transmission solutions have become pivotal in driving business growth for enterprises. We understand your needs for enhancing network bandwidth, reducing operational costs, and achieving rapid business deployment. Therefore, we are delighted to introduce two leading 100G DWDM products, along with our cost-effective wavelength division multiplexing (WDM) subsystem solution, aiming to bring an unprecedented upgrade experience to your network architecture.

    100G QSFP28 PSM DWDM4 – C-BAND
    The Powerhouse for Long-Distance Transmission

    100g-qsfp28-psm4

    Technical Highlights: The 100G QSFP28 PSM DWDM4 – C-BAND employs a four-carrier Color ZR+ C-BAND design. It features 4x25G C-band 100GHz DWDM EML lasers at the transmitter and efficient PIN detectors at the receiver. With support from DCM dispersion compensation and EDFA amplification, it ensures a transmission distance of at least 80km. The MPO-12 interface design simplifies fiber connections, and the total power consumption is below 5W, making it both environmentally friendly and efficient.

    Application Scenarios: Ideal for long-distance transmission needs such as 100G Ethernet metropolitan access and point-to-point access networks, providing stable and reliable data transmission channels for operators and enterprises.

    One-Stop Solution: Paired with GIGALIGHT’s self-developed intelligent 1U optical layer equipment, including DWDM EDFA, AAWG, and tunable TDM or fixed DCM, it offers customers a complete non-coherent DWDM transmission solution from optical transceivers to optical layer equipment, accelerating business deployment.

    100G QSFP28 DWDM1 O-BAND
    The Cost-Effective Choice for Short-Distance Transmission

    100g-qsfp28-lr4

    Technical Highlights: The 100G QSFP28 DWDM1 O-BAND silicon photonics module adopts PAM4 modulation mode, supporting a full range of 16 wavelengths covering the O-Band DWDM with a 200GHz wavelength spacing. The O-Band’s natural low-dispersion characteristics reduce signal distortion, eliminating the need for additional dispersion compensation. With a power consumption below 3.5W, it is 20% lower than similar products, contributing to green data center construction.

    Application Scenarios: Widely used in medium-to-short-distance transmission scenarios such as metropolitan access and aggregation networks, inter-data center interconnectivity (DCI), and 5G front-haul, providing cost-effective solutions for 5G networks, enterprise private lines, and distributed computing power.

    Flexible Adaptability: Decoupled from white-box equipment, it enhances network deployment flexibility and meets customers’ needs for open optical networks.

    10km interconnectivity without SOA amplifier

    30km interconnectivity with SOA amplifier

    Metropolitan access and aggregation applications (30km with SOA)

    Cost-Effective WDM Subsystem Solution: The Ultimate Pursuit of Cost Efficiency
    GIGALIGHT’s cost-effective WDM subsystem solution focuses on the application of non-coherent DWDM technology, achieving short-distance, high-capacity transmission by simplifying the optical layer design and reducing costs. This solution is particularly suitable for scenarios that are cost-sensitive and have low requirements for transmission distance, such as DCI, 5G, and enterprise private networks.

    Core Advantages:

    • Cost Efficiency: Hardware costs can be reduced by 30%~50% compared to coherent DWDM solutions, along with reduced deployment and maintenance costs.
    • Short-Distance High-Speed Transmission: Leveraging advanced modulation technologies like PAM4, it achieves single-wavelength 100G~400G short-distance transmission, meeting high-speed data transmission needs.
    • Simplified Operations and Maintenance: Reduces reliance on complex optical layer management, enhancing system reliability and lowering operational difficulty.
    • Green Communication: Low-power design aligns with the trend of low-carbon communication, contributing to the realization of “dual carbon” goals.

    GIGALIGHT believes that by introducing our 100G DWDM products and cost-effective WDM subsystem solution, you will significantly enhance network performance, reduce operational costs, and accelerate business innovation. We look forward to collaborating with you to explore new paths for network upgrades and jointly creating a brilliant future in the digital era.

    Please feel free to contact us for more product details and customized solutions. We anticipate in-depth exchanges and collaborations with you!