SemiAnalysis Says CPO Yield and Cost Challenges Will Delay Large-Scale Production

Co-packaged optics (CPO) integrates optical engines and switch ASICs in the same package, reducing power consumption and latency in high-speed interconnects for AI data centers. It is therefore seen as critical to the expansion of AI infrastructure by NVIDIA and other companies. Whether mass production begins on schedule will directly affect revenue expectations across the optical-module, silicon-photonics and advanced-packaging supply chains.

A SemiAnalysis report dated June 9, 2026, said that even if the connection yield for a single optical engine reaches 95%, integrating 32 engines with each ASIC would leave the overall system yield at only about 19%. It estimated that large-scale CPO production would be delayed until 2028–2029. AAOI plunged 17.17% that day to close at $162.88, while Coherent fell 11.44%. Morgan Stanley reiterated on June 11 that the long-term trend remained intact.