Nvidia says it began mass production of co-packaged optics

NVIDIA ↘ 1.47% Senior Vice President Gilad Shainer announced on Monday that the company has commenced mass production of Co-Packaged Optics, a technology that integrates optical communications directly alongside switch chips to deliver higher bandwidth with less power consumption. The milestone marks a shift from early partner shipments to broader manufacturing scale, positioning CPO as a cornerstone of next-generation AI data center infrastructure.

From Shipments to Scale

NVIDIA had begun shipping its Spectrum-X CPO switches to select partners earlier this year, as reported by the Taipei Times in June. At the time, Shainer indicated the company would ramp CPO in the second half of 2026. The switches, co-developed with supply chain partners including TSMC, are now being delivered to closely collaborating customers and deployed internally, with wider adoption in AI factories expected through the remainder of the year.chaincatcher+2

The Spectrum-X Ethernet Photonics platform in its maximum configuration features 512 ports at 800 Gbps each, reaching a total bandwidth of 409.6 Tbps. NVIDIA has said the technology delivers a tenfold increase in performance through a scale-up approach compared to traditional scale-out methods. The company plans to extend CPO from scale-out networking into scale-up interconnects with its future Feynman architecture.taekim.substack+2

Supply Chain Tensions Loom

The announcement arrives against a backdrop of mounting concern over shortages in the optical supply chain. Lumentum ↘ 0.92% CEO Michael Hurlston warned in July that the supply shortage of indium phosphide — the material essential for laser light sources in optical interconnects — could become more severe than that of DRAM or NAND memory. Research firm LightCounting estimated that optical transceiver demand exceeds supply by 30%.xenospectrum

Even with CPO, InP light sources remain on the bill of materials — demand shifts toward high-power continuous wave lasers rather than disappearing. In March, NVIDIA invested $2 billion each in Lumentum and Coherent, securing multi-year purchase commitments and access to future production capacity from both companies.xenospectrum

The Race Between Demand and Supply

Industry efforts to ease the bottleneck include a transition to larger 6-inch InP wafers, which Coherent says can quadruple device output per wafer and cut chip costs by more than 60%. Lumentum's new Greensboro, North Carolina facility, however, won't reach mass production until mid-2028. Whether CPO's ramp strains or stabilizes the optical supply chain will depend on how quickly the 6-inch wafer transition delivers results against accelerating demand from AI infrastructure buildouts worldwide.xenospectrum