CPO Primer Ahead of GTC and OFC

Summary of Co-Packaged Optics (CPO) Primer and Company Impacts Industry Overview - The focus is on the Co-Packaged Optics (CPO) technology within the semiconductor industry, particularly in the context of upcoming conferences (GTC and OFC) where major companies like Nvidia (NVDA) will showcase new technologies [1][2]. Core Points and Arguments CPO Technology and Market Dynamics - CPO technology is expected to dominate discussions in the coming weeks, particularly with Nvidia unveiling new switches featuring CPO options [2]. - Investor sentiment towards CPO has been negative for companies like Marvell (MRVL), Coherent (COHR), and Lumentum (LITE), but the actual impacts may not be as severe as perceived [2]. - The transition to CPO is seen as a long-term opportunity, particularly for Scale-Up configurations, which are expected to have a larger volume potential compared to Scale-Out configurations [3]. Company-Specific Impacts Nvidia (NVDA) - Nvidia is positioned as a leader in CPO due to its full system provider status, which allows for easier implementation of CPO compared to competitors [6]. - Upcoming products include the Quantum 3400 and Spectrum 5/6 switches, with initial volumes expected to be low [6][10]. - NVLink 6 is under consideration for CPO, which could expand the total addressable market (TAM) for optical providers [6]. Broadcom (AVGO) - Broadcom is well-positioned to benefit from the transition to CPO, maintaining a significant share in the ethernet-based switching market [7]. - The company has a roadmap for CPO-based xPU interconnects, with a target of 102.4T by 2028 [7]. Marvell (MRVL) - Marvell holds a dominant position in the DSP market but faces potential disruption from CPO technology [8]. - While Scale-Up presents an opportunity, the company may experience headwinds in Scale-Out as CPO adoption is expected to be gradual [8]. Coherent (COHR) and Lumentum (LITE) - Both companies face negative sentiment due to the potential loss of transceiver sales in CPO architectures, but they can still supply lasers, which have higher gross margins [9]. - The transition to CPO is seen as a TAM expansion for these companies, despite the challenges posed by Scale-Out [9]. Additional Important Insights - The CPO technology is driven by power and space constraints in data centers, with optical DSPs being less than 5% of the power envelope in typical racks [15]. - CPO offers significant power savings (up to 70% per link) compared to traditional pluggable modules, which is crucial as AI data centers continue to grow [22]. - The interconnect landscape is evolving from copper and optical-based pluggables to CPO, with the expectation that CPO will be the first step before moving to In-Package Optical I/O (OIO) [25][42]. Conclusion - The semiconductor industry is on the brink of a significant transition with CPO technology, which presents both opportunities and challenges for key players like Nvidia, Broadcom, Marvell, Coherent, and Lumentum. The upcoming conferences will likely provide further insights into the adoption and impact of CPO technology on these companies and the industry as a whole.