Nvidia(US:NVDA)2026-01-04 11:35Summary of Co-Packaged Optics (CPO) Conference Call Industry Overview - The conference focuses on Co-Packaged Optics (CPO) technology, which is anticipated to revolutionize data center connectivity, with deployment-ready products expected by 2025 [5][6]. - The technology is seen as a response to the increasing demands of AI workloads, which require higher interconnect speeds, range, density, and reliability than current transceivers can provide [6][7]. Key Points and Arguments - CPO vs. Traditional Transceivers: Traditional pluggable transceivers have been the default due to their cost-effectiveness and interoperability. However, CPO is expected to become central to scale-up networking, particularly for AI applications [5][6][7]. - Bandwidth and Power Efficiency: CPO can deliver equal or superior bandwidth density compared to copper-based solutions, while also enabling larger scale-up domains. For instance, CPO can reduce energy consumption for data transmission by over 50% compared to DSP transceivers, with some aiming for an 80% reduction [10][12]. - Market Readiness: Companies focused on CPO are moving beyond pilot projects to make critical product decisions, indicating that the adoption of CPO is shifting from a question of "if" to "when" and "how" [14]. Financial Projections - Celestial AI estimates a potential revenue run rate of $1 billion by the end of 2028, primarily driven by CPO solutions integrated with Amazon's Trainium 4 [12][13]. Technical Insights - Power Consumption: The power consumption of optical transceivers is a significant concern, with estimates showing that a large GPU cluster could consume 17 MW solely from optical transceivers. CPO technology could significantly reduce this power requirement [38][39]. - Comparative Power Usage: An 800G DSP transceiver consumes about 16-17W, while CPO systems can reduce this to approximately 4-5W per 800G, representing a 73% reduction in power consumption [39][40]. Supply Chain and Product Development - The report discusses the supply chain for CPO, including key suppliers for components such as laser sources and optical engines. Nvidia's CPO ecosystem is highlighted, showcasing the integration of various components necessary for CPO deployment [23][24]. - Major companies like Nvidia and Broadcom are leading the development of CPO solutions, with a focus on high port count switches that simplify network architecture and reduce power consumption [46]. Conclusion - CPO technology is positioned to address the growing demands of AI and data center networking, with significant potential for cost and power savings. The industry is moving towards broader adoption, with key players making strategic decisions to bring CPO products to market [15][22].