Co-Packaged Optics Market Grows at a Steady CAGR of 31.67%

Introduction

Straits Research published a report, “Co-Packaged Optics Market Size & Outlook, 2026-2034”. According to the study, the global co-packaged optics market size is valued at USD 98.42 million in 2025 and is projected to expand to USD 1,160.12 million by 2034, registering a compound annual growth rate (CAGR) of 31.67%.

Market Dynamics

The global co-packaged optics market is driven by demand for compact, energy-efficient interconnects, growing investments in edge computing, and the need for scalable optical solutions in enterprise networks. Opportunities include expansion in emerging regions, partnerships between semiconductor and optical component manufacturers, and adoption in smart cities, AI-driven networks, and IoT infrastructure, enabling faster, low-latency connectivity across applications.

However, the high initial cost and design complexity of integrating optics with switch ASICs pose significant challenges to the widespread adoption of co-packaged optics. Developing and manufacturing these systems requires advanced packaging technologies, precise thermal management, and alignment processes, all of which increase production expenses.

Market Highlights

• Data Rate Outlook: The 2T segment dominates the global co-packaged optics market with over 35% share, driven by its strong adoption across hyperscale and enterprise data centers.
• Component Outlook: Laser sources are the fastest-growing component segment, advancing at a CAGR of 35.21%. The surge stems from the rising need for power-efficient and thermally stable lasers in optical interconnects.
• End-Use Application Outlook: High-performance computing (HPC) and AI/ML clusters are the fastest-growing end-use applications, registering an impressive CAGR of 39.18%.
• Regional Insights: The Asia-Pacific co-packaged optics market is dominant with a market share of over 40%, driven by rapid digital infrastructure expansion, 5G rollouts, and growing data center investments.

Competitive Players

1. Broadcom Inc.
2. Intel Corporation
3. NVIDIA Corporation
4. Cisco Systems, Inc.
5. IBM Corporation
6. Ayar Labs Inc.
7. Ranovus Inc.
8. Marvell Technology, Inc.
9. Molex, LLC
10. TE Connectivity Ltd.
11. Coherent Corp.
12. Corning Incorporated
13. Furukawa Electric Co., Ltd.
14. POET Technologies Inc.
15. Hisense Broadband Multimedia Technologies Co., Ltd.
16. Kyocera Corporation
17. Sumitomo Electric Industries, Ltd.
18. SENKO Advanced Components, Inc.
19. Applied Optoelectronics, Inc. (AOI)
20. AMD (Advanced Micro Devices)

Recent Developments

Segmentation

1. By Data Rate
   1. Less than 1.6T
   2. 6T
   3. 2T
   4. 4T and Above
2. By Component
   1. Optical Engine
   2. Electrical IC
   3. Laser Source
   4. Connector and Packaging
   5. Others
3. By End-Use Application
   1. Hyperscale Cloud Data Centers
   2. Enterprise Data Centers
   3. Telco Central Offices
   4. HPC and AI/ML Clusters
   5. Others