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Jukan
《GF International Electronics & Communications》

AI Networking: NVIDIA's Accelerated Roadmap, CPO Technology Debate Heats Up

Key CPO Takeaways from Recent Earnings Calls: Coherent mentioned it has secured a significant order from a leading AI data center customer to supply CW Lasers for its CPO systems. Initial revenue is expected to begin in 4Q26, with more meaningful contributions starting in 2027. Lumentum stated it has received hundreds of millions of dollars in CW Laser commitments for Scale-out CPO, with volume production contributions beginning in 1H27. Assuming combined order value of $400 million for laser suppliers such as LITE and COHR in 2027, this implies approximately 80,000 Scale-out CPO switches will be shipped that year. We believe this CPO switch shipment volume is consistent with downstream suppliers' capacity buildout plans.

NVIDIA May Accelerate Scale-out CPO Switches: At GTC 2025, NVIDIA (NVDA, Buy) unveiled its CPO switches, with Quantum-X planned for launch in 2H25 and Spectrum-X in 2H26. NVIDIA's first-generation Scale-out CPO (Quantum-X) adopts a pluggable architecture rather than true CPO. The system supports 115.2T switching bandwidth and integrates 36 pluggable optical engines, making it more accurately classified as NPO. However, due to its lack of cost-performance advantage over traditional pluggable solutions, customer adoption has been limited, with minimal shipments in 2025. For GTC 2026, we expect NVIDIA may unveil a next-generation CPO switch. This generation is expected to feature 115.2T bandwidth, with the CPO portion manufactured by TSMC. We believe this CPO design offers significant improvements in thermal performance and bandwidth, with cost-performance far exceeding the previous generation. The supply chain is expected to begin ramping in 2Q26 and accelerate through 2H26/2027. Driven by NVIDIA's aggressive push and bundling sales strategy, we are raising our NVIDIA Scale-out CPO switch shipment estimates for 2025/2026/2027 to 2,000/20,000/80,000 units. As for 2027, despite the surge in shipments, our estimate represents only a single-digit percentage of total Scale-out switch shipments for the year.

NVIDIA Scale-up CPO Progress Update: According to recent earnings calls, Lumentum emphasized that as copper interconnects approach their limits, optical Scale-up represents a long-term structural opportunity beginning in late 2027. As we noted in our report, we expect NVIDIA to introduce CPO/NPO within the NVL576 architecture starting with Rubin Ultra in 2H27, specifically for Scale-up interconnects. Within the NVL576 architecture, Compute trays and Switch trays are expected to continue relying on backplane connections, while inter-rack interconnects may transition to CPO- or NPO-based optical interconnects. Technically, CPO holds clear advantages in power consumption and bandwidth density, while NPO is easier to manufacture and maintain. We believe TSMC's Scale-up CPO solution has already provided samples, but mass production readiness remains uncertain, indicating that the NPO vs. CPO debate will persist in the near term.

Key Beneficiary Stocks: Overall, Scale-up CPO represents a purely incremental opportunity for the optical interconnect supply chain, as it aims to replace copper interconnects without affecting Scale-out. Furthermore, Scale-up and Scale-out CPO solutions share the same suppliers. Accordingly, we expect the primary beneficiaries to be component suppliers of FAUs, CW Lasers, ELS FP modules, and Shuffles. Our views: 1) Bullish on Lumentum, given upside potential in CW Laser demand; 2) Neutral impact on Coherent; 3) We expect Browave (3163 TT) to benefit, given its approximately 50% market share in CPO Shuttle Boxes, unit price of $5,000–6,000, and volume production ramp beginning in 2Q26.

$COHR $LITE $NVDA
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