Optical communication achieves a major breakthrough! The CPO concept experiences a huge surge, with a trillion-dollar giant hitting the daily limit.

On March 25, the CPO (co-packaged optics) concept saw active trading at the open. In the middle of the trading session, the giant with a market value of over 100 billion, Yangtze Optical Fibre and Cable, touched the daily limit; by 11:11 a.m., the gain was 9.29%. Aled earned a 20CM daily limit; ChuanKe Technology, and also firms such as MINGPU Optical Magnetics, also quickly hit daily limits one after another. Stocks such as Fuxin Technology, Changguang Huaxin, and Luxshare Precision also followed higher.

On the news front, U.S. stocks related to optical communications performed strongly overnight. Lumentum’s stock price rose 10%, reaching a new all-time high during the day; Coherent rose 6.78%. At the same time, China achieved an important breakthrough in optical-communication transmission: for the first time, on a 24-core single-mode optical fiber at 10.3 kilometers, it achieved real-time bidirectional transmission capacity of 2.5 Pb/s (Pb/s).

From a technical perspective, China Great Wall Securities, in its research report, pointed out that generative AI is driving data-center high-speed transmission demand to grow at an exponential rate, and traditional short-distance copper-cable solutions face severe tests in terms of transmission density and energy consumption. By contrast, the MicroLED co-packaged optics (CPO) solution has clear advantages: overall power consumption can be reduced to 5% of the copper-cable solution. Based on a “wide and slow” architecture (hundreds of low-speed parallel channels), it combines the advantages of long-distance optical transmission with low power consumption, high reliability, and a time failure rate (FIT) below 10, comparable to copper cables. Meanwhile, traditional laser emitters consume high power and have lower reliability; copper cables’ high-speed transmission distances are insufficient for 2 meters and are also limited by susceptibility to electromagnetic interference.

And with the explosive growth in today’s AI compute-demand, it is becoming the core driving force for upgrading the optical-communications industry. Gu Fengtou Investment Advisory believes that global AI compute infrastructure construction is entering a phase of rapid expansion, with compute demand generated by AI foundation model training and inference showing exponential growth. Under the dual drivers of the global AI compute boom and rapid expansion of data centers, CPO, as the core technology for next-generation optical interconnection, is moving through a critical transition period from pilot commercialization to large-scale deployment. In the future, development shows a clear core trend with high growth.

In terms of commercial rollout timing, Gu Fengtou Investment Advisory predicts that 2025 to 2027 will be the rapid growth period, when CPO will first roll out high-end AI compute clusters and the core networks of ultra-large cloud data centers. After 2027, it will gradually penetrate general data centers. It is expected that by 2030, the market size of core components will exceed $15 billion, becoming the core engine of growth for the optical communications industry. In the market landscape, concentration among leading companies continues to rise. Overseas tech giants and domestic leading enterprises will simultaneously step up R&D. Domestic substitution will accelerate across key areas such as optical chips and optical components, and the localization rate will steadily increase. At the same time, industry standards will be unified step by step, driving coordination and maturation across the upstream and downstream of the industrial chain.

In a latest forward-looking report, Bank of America Securities stated that AI infrastructure is driving demand for optical networks into a new “super cycle.” Its core driving force is not a single factor like compute expansion, but rather the evolution of data-center architecture from “Scale-Up” to “Scale-Across,” which is significantly increasing demand for optical interconnects across data centers. Bank of America Securities expects that from 2026 to 2027, the global optical transmission market will maintain growth of more than 10%, and that 800G coherent optical modules and pluggable ZR/ZR+ optical modules will become the fastest-growing sub-sectors.

(Statement: The content of this article is for reference only and does not constitute investment advice. Investors act at their own risk.)