NVIDIA's partners on co-packaged optics, or CPO, have said that the deployment of the first server solutions remains on track.
Recently, there have been several rumors regarding the adoption of CPO in the data center ecosystem. As per the rumor mill, the adoption of CPO was said to be delayed for years, but during recent investor calls, both Lumentum and Coherent have stated that the production of CPOs remains on track.
According to Lumentum, the demand for ultra-high power CPO lasers is gaining momentum and that, in addition to CPO, several NPO engagements are "underway". The company expects that the volume shipments for scale-up would commence in the second half of 2027 & the first customer deployments are expected in 2028.
Coherent also hosted in investors call this week, in which it said that scale-out CPO revenue begins in the second half of 2026 (rack-to-rack), while scale-up CPO revenue is expected to follow in 2027. Coherent also highlighted that it is engaged with multiple customers on its CPO & NPO offerings.
Both of these companies have one major client, and that is NVIDIA. In March, NVIDIA announced a multi-year "strategic partnership" with Lumentum Holdings to accelerate optics technologies. NVIDIA announced a $2 billion investment in Lumentum to support R&D, increased capacity, and operations as the company expands its US manufacturing landscape with a brand new fab.
Optical interconnect technology and package integration are critical for the continued scaling of AI factories, improving the energy efficiency and resiliency of large-scale AI networks. This expanded collaboration will draw on the strengths of NVIDIA’s leadership in AI, accelerated computing and networking, and Lumentum’s leadership in optics and advanced manufacturing. The investment enables Lumentum to scale its manufacturing capacity and R&D to meet the needs of future AI data centers.
On the other hand, Coherent recently broke ground on its new Texas plant , where the world's first 6-inch indium phosphide fab will be built for volume production. These InP wafers will be the fundamental technology that enables the transfer of data between chips, servers & data centers at the speed of light through optical networks.
NVIDIA stated that its Vera Rubin NVL576 servers will connect eight NVLink racks of 72 Rubin Ultra GPUs into a singular 576-GPU domain. This server will have to break past the traditional copper networking solution to carry signals across vast distances, and that's where CPO comes into play.
The AI giant also invested $2 billion in Coherent back in March to develop optics technologies to scale next-gen data center architectures.
All of these investments are crucial for NVIDIA, as others are also following suit. AMD is expected to tap GlobalFoundries to leverage Co-Packaged Optics on its next-gen AI servers featuring the Instinct MI500 GPUs. The same MI500 GPUs are positioned against Rubin Ultra, with both coming out in the second half of 2027. NVIDIA's Feynman GPUs are also expected to go one step ahead of Rubin Ultra on the CPO front when they arrive in 2028.
Recent earnings comments from Lumentum and Coherent have swept aside delay rumors: ultra-high-power CPO laser demand is rising, scale-out revenue starts in H2 2026, scale-up volumes follow in 2027, and customer deployments are expected in 2028. With multi-billion-dollar NVIDIA investments accelerating capacity and R&D at both suppliers, co-packaged optics are set to power the next generation of AI factories, from Vera Rubin onward, right on schedule.
News Source: Tae Kim (X)
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