Silicon Photonics and Co-Packaged Optics Drive AI-Powered Data Centers, Yole Group Reports

The silicon photonics and co-packaged optics (CPO) markets are poised for significant growth as AI-driven demand reshapes data center connectivity, according to Yole Group’s reports, *Silicon Photonics 2025* and *Co-Packaged Optics for Data Centers 2025*. The reports highlight the transition to 200G/channel links as the new mainstream by 2026/27, enabling 800G and 1600G transceivers to meet the performance and energy efficiency needs of AI workloads.

A diverse ecosystem is advancing the industry, with vertically integrated companies like TeraHop, Cisco, Broadcom, and Marvell collaborating with startups such as Ayar Labs, Lightmatter, Celestial AI, and Nubis Communications. Foundries including TSMC, GlobalFoundries, Intel, and STM, alongside equipment suppliers like Applied Materials and ficonTEC, are scaling production to support applications in data communications, LiDAR, and emerging quantum technologies.

China is emerging as a significant competitor, with companies like TeraHop, Hisense, and Accezlink shipping millions of modules for AI interconnects. Supported by government programs and academic collaboration, Chinese suppliers are narrowing the technological gap with Western counterparts.