Given the exponential growth in AI computing power demands, traditional copper cables face dual bottlenecks in bandwidth density and power consumption in short-reach interconnect scenarios within data centers. The MicroLED-based CPO (Co-Packaged Optics) solution, boasting exceptional energy efficiency, has become a focal point for both the industry and investors.
How far is this "disruptive" technology from truly reshaping the data center interconnect landscape? Recently, reporters from China Electronics News interviewed multiple companies across the industry chain, aiming to present a calm and in-depth perspective for the industry across multiple dimensions, including technical metrics, application prospects, and commercialization challenges.
Power Consumption Achieves "Generational Breakthrough", but Single-Channel Rate Remains a Shortcoming
MicroLED CPO is an optical interconnect technology combining MicroLED technology with Co-Packaged Optics, aiming to address the power consumption, bandwidth, and latency challenges of high-speed data transmission in data centers, high-performance computing, and other fields.
Currently, what is the actual level of the core technical metrics for MicroLED applied in the optical interconnect CPO field? Responses from interviewed companies indicate that while this technology has achieved a disruptive breakthrough in energy efficiency, it still lags in single-channel rates and when compared to traditional VCSEL (Vertical-Cavity Surface-Emitting Laser, currently widely used in pluggable optical modules) solutions.
Low power consumption is the hallmark of MicroLED's current "entry" into CPO co-packaging. He Jun, General Manager of Nanjing Xinshiyuan Electronics Co., Ltd., provided specific data: "Currently, MicroLED performs most outstandingly in terms of power consumption, dropping to 1~2pJ/bit, which is only 5%~10% of that in VCSEL solutions, and requires no TEC (Thermoelectric Cooler) temperature control." This advantage directly addresses the thermal dissipation pain points of high-density CPO integration.
However, in terms of modulation bandwidth, a gap remains between MicroLED and VCSEL solutions, which are also used for short-reach transmission. He Jun pointed out that the commercial level of MicroLED is generally 2~4 Gbps per single channel, with a laboratory maximum reaching 10Gbps, whereas VCSELs have been maturely commercialized at 50~100Gbps.
Internal research from ams OSRAM also validates this: data communication transceivers utilizing MicroLED emitters can achieve a single-channel rate of 3.0Gbit/s over a 10-meter full link, with energy consumption per bit below 2 picojoules, while meeting the bit error rate requirements specified by industry standards. Huang Shaohua, Deputy General Manager of the GaN Business Unit at Sanan Optoelectronics, added that current bandwidth can reach 1.5~2GHz per channel. Power consumption requires continuous optimization and is expected to be reduced to less than 4.5pJ/bit by 2027.
To address the bandwidth shortcoming, the industry has proposed a "Wide and Slow" (WaS) approach. Dominik Schulten, Director of the Optical Data Communications Product Line at ams OSRAM, noted in his latest technical article that a new approach gaining increasing attention in the data center sector is the "low-speed wideband" strategy. This involves "replacing a single ultra-high-speed link with hundreds or even thousands of low-speed parallel optical channels, achieving higher total bandwidth while utilizing simpler, cheaper, and lower-speed components." Reportedly, the core capability of this approach lies in integrating hundreds of optical emitters in close proximity to server data processors and storage components. The resulting advantages include: achieving seamless failover for a single faulty emitter through the configuration of multiple redundant channels; operating each emitter at a relatively low switching frequency (typically around 1GHz), which significantly reduces power consumption and waste heat compared to ultra-high-frequency laser emitters; and leveraging the architecture's native parallelism, thereby eliminating the need for complex and costly serialization and deserialization schemes.
Dominik Schulten pointed out that the "low-speed wideband" approach remains an unverified technical path in the data center sector. It requires deep collaboration with data communication equipment manufacturers, specifically involving the integration of driver circuits compatible with high-frequency data emitters, the optimization of micro-packaging design schemes, and ensuring interoperability with commercial optical connectors, cables, and optical fibers.
Overall, MicroLED has achieved a "disruptive breakthrough" in energy efficiency, addressing the long-standing "power wall" issue in CPO. However, the excessively low single-channel rate is widely regarded as the most significant technical bottleneck at present. As He Jun noted, a low single-channel rate means that achieving a total bandwidth of 1.6T requires hundreds of parallel channels, posing a massive challenge to the packaging accuracy, cost, and yield for a massive number of optical fibers.
Targeting Short-Reach Interconnects in AI Data Centers, Scaled Application Expected Around 2028
Despite these challenges, when it comes to the initial application scenarios for MicroLED optical interconnect CPO, companies across the industry chain are highly consistent in pointing to ultra-short-reach high-speed interconnects within AI data centers.
Tu Menglong, Senior Director of the Technology R&D Center at Ledman Optoelectronic, believes that the initial deployment scenario will be "ultra-short-reach high-speed optical interconnects of ≤50 meters within AI data center racks, between boards, and between chips." He Jun further specified this as "Co-Packaged Optics (CPO) modules and Active Optical Cables (AOC)," with transmission distances restricted to intra-rack or inter-rack interconnects within 10 meters.
"The greatest advantage of MicroLED is its ultra-low power consumption (below 1pJ/bit) and high thermal stability (withstanding 125°C). Meanwhile, AI data centers are confronting a severe 'power wall' challenge, as traditional copper cables suffer from transmission distances of less than 2 meters under high bandwidth and generate significant heat." Tu Menglong believes that in this scenario, MicroLED's shortcoming of a "low single-channel rate" can be offset by a "wide and slow" parallel architecture with hundreds of channels, achieving a total bandwidth of over 1.6T.
Regarding the timeline for scaled deployment, various companies have provided relatively consistent forecasts, albeit with a cautious attitude.
He Jun told reporters that, synthesizing assessments from multiple institutions, 2026 will mark the inaugural year for the deployment of MicroLED optical interconnect CPO products (with several manufacturers already launching evaluation kits and samples). From 2027 to 2028, the industry will gradually enter a mass production ramp-up phase, with scaled deployment expected around 2028. It should be noted that this progress is highly dependent on the pace of overcoming engineering bottlenecks, such as improving the performance of light-emitting chips and enhancing optical coupling accuracy.
Tu Menglong analyzed that, in terms of customer acceptance, scaled adoption is expected in 2027, with full acceptance by 2028, making it the mainstream for short-reach interconnects in AI data centers. Regarding cost competitiveness, 2027 is expected to be the cost inflection point (reaching parity), and a significant advantage will emerge from 2028 to 2029 (with overall costs more than 30% lower). Huang Shaohua, however, believes that "it will likely take another 3~5 years to see a truly competitive landscape."
Additionally, Chen Lixuan, Vice President of the Display Product Line at Unilumin Technology, added that MicroLED CPO is a complementary optical communication solution with distinct advantages in short-reach communication. However, it may still take 2~3 years to fully align and integrate solutions across the industry chain.
Not all companies are focusing on the highly challenging CPO. Huang Shaohua frankly stated, "Given the current maturity of projects, CPO remains quite difficult, making optical modules a more viable near-term application."
From "Single-Point Breakthrough" to "System Synergy": Optical Coupling Efficiency is the Greatest Technical Challenge
Although the prospects are promising, truly commercializing MicroLED CPO still faces severe challenges across both technical and non-technical dimensions, with obvious shortcomings present in multiple links of the industry chain.
Regarding technical challenges, optical coupling efficiency and chip yield are the core bottlenecks. He Jun pointed out that the greatest difficulty lies in optical coupling efficiency. MicroLEDs have a light-emitting angle of 120~150 degrees, exhibiting Lambertian divergence, whereas the receiving angle of optical fibers is extremely narrow. Coupling accuracy must be controlled within ±1~2 microns; otherwise, efficiency losses can exceed 30%. The second bottleneck is chip yield. Reliability requirements for optical communication far exceed those for displays, and insufficient chip yield directly limits the number of channels, thereby constraining total bandwidth.
Tu Menglong summarized that the triple bottlenecks in precision and yield for mass transfer, heterogeneous integration, and optoelectronic coupling represent the most critical sticking points at present. Additionally, Norwin von Malm, Senior Director of New Technologies at ams OSRAM, noted that the greatest technical challenge currently facing MicroLED CPO is that the "low-speed wideband" approach remains an unverified technical path in the data center sector.
Non-technical challenges are even more critical and difficult to resolve in the short term. The first is cost; currently, the cost of MicroLED CPO solutions is 5~10 times that of copper cables. The second is the immaturity of the supporting industry chain.
Chen Lixuan told reporters that the overall maturity of the entire industry chain remains low. Although MicroLED technology has seen commercial application in fields like AR glasses thanks to the groundwork laid by the display industry, transitioning it to the optical communication field requires overcoming multiple issues, such as light-emitting angles, coupling efficiency, signal-to-noise ratio, and signal driving. This demands joint efforts from both upstream and downstream sectors of the industry chain. Huang Shaohua also emphasized, "The entire supply chain does not yet possess a complete solution, so the challenges remain relatively high."
Furthermore, the lack of ecosystem synergy is a widespread consensus. He Jun believes that chip, CMOS driver, packaging, and system manufacturers require deep collaboration, but currently, "standards for each segment remain undefined, and the integration cycle is long." Additionally, there is a severe lack of dedicated testing equipment for MicroLED optical interconnects.
Notably, the obvious shortcomings in the industry chain are concentrated in optical coupling components, multi-core fiber support, and advanced packaging processes, which happen to be the exact focus areas for some companies.
Reporters learned that Xinshiyuan, as a CMOS driver backplane supplier, is extending its accumulated capabilities in high-density arrays and low-power design from the display driver field into optical communication as a core strategic move. The company is restructuring its driver architecture and has completed verification on an 8-inch process platform. Relevant driver chips have been sampled by multiple MicroLED light source manufacturers. The next step will involve collaborating with light source and packaging partners to jointly advance standard formulation and mass production integration.
"From a market perspective, AI data centers have extremely stringent power consumption requirements for CPO. The MicroLED solution requires each light-emitting pixel to be paired with an independent driver unit, which is precisely the core advantage of a CMOS backplane." He Jun told reporters, "We can provide high-density arrays featuring thousands of driver channels per square millimeter, while keeping driver power consumption at the pJ/bit level, directly addressing the power consumption pain point."
ams OSRAM is actively driving the application transition of MicroLED technology in optical interconnects. This specifically includes integrating driver circuits compatible with high-frequency data emitters, optimizing micro-packaging design schemes, and ensuring interoperability with commercial optical connectors, cables, and optical fibers. The company also possesses mass production capabilities for both MicroLEDs and photodiodes (optical receivers), enabling it to play a role in the development of fully integrated optical data transmission systems.
Leveraging its over 20 years of R&D experience in MicroLED packaging, Ledman Optoelectronic highly values the new growth opportunities driven by AI computing power demands and is actively deploying optical interconnect CPO. The company has currently made significant progress in substrate-free chip transfer and packaging, and its next step will involve collaborating with university teams to align with the latest technical solutions. Sanan Optoelectronics, meanwhile, focuses on its role at the source end of the industry chain, providing customers with high-speed MicroLED light sources while iterating on efficiency and reducing the divergence angle to improve optical coupling efficiency.
Clear Substitution for Copper Cables, Complementary Coexistence with Silicon Photonics CPO
The substitution of traditional copper cables by MicroLED CPO is already quite clear. Under 800G/1.6T high bandwidth, traditional copper cables consume over 10pJ/bit and have a transmission distance of less than 2 meters. In contrast, MicroLED CPO can reduce power consumption to 5% of that used by copper cables, down to about 1.6W, demonstrating significant advantages in ultra-short-reach scenarios within racks.
So, what is the relationship between MicroLED CPO and silicon photonics CPO? Interviewed companies generally believe that the two are more complementary and will coexist. He Jun illustrated that the two will form a synergistic landscape of "short-reach MicroLED + long-reach silicon photonics": MicroLED will focus on short-reach transmission between chips, between boards, and within racks up to 10 meters, prioritizing ultimate energy efficiency; whereas silicon photonics CPO will cover interconnects beyond 10 meters and long-reach links, benefiting from mature technology and longer transmission distances. Tu Menglong shares a similar view, considering them to have a complementary relationship of "short-reach vs. medium-to-long-reach" that will coexist for the long term.
Looking at the present, the capital market has shown extremely high interest in the MicroLED CPO concept this year. So, how significant is the opportunity for this technology to truly reshape the data center interconnect landscape? Is there a risk of overheating?
"The opportunity for MicroLED CPO to truly reshape the data center interconnect landscape certainly exists and cannot be ignored, but clarity must be maintained amidst industry hype." He Jun believes the opportunity is concentrated in intra-rack and inter-board interconnect scenarios within 10 meters. At bandwidths of 800G/1.6T and above, the power consumption of copper cables has approached physical limits, whereas MicroLED CPO can reduce power consumption to 5%~10% of that used by copper cables, representing a compelling, hard-demand advantage. Once engineering bottlenecks are overcome, it is expected to capture 20%~30% of the short-reach interconnect market share in power-sensitive scenarios such as AI clusters.
However, He Jun also pointed out that the greatest risk is not the technical path itself, but whether the pace of industry chain maturation can outstrip copper cable iterations and silicon photonics cost reductions. If copper cables delay power consumption growth through new materials in the 1.6T/3.2T era, or if silicon photonics significantly reduce short-reach costs, the market window for MicroLED could be compressed.
Tu Menglong predicted that MicroLED CPO will highly likely reshape the ≤50-meter high-speed interconnect landscape in data centers, becoming the mainstream solution in the AI era. However, the greatest risk remains the uncertainty of the technical path, including "make-or-break" factors such as chip performance and yield, mass transfer, and coupling efficiency, which will determine whether it can transition from the "laboratory" to "mass production." Another risk is that market acceptance and ecosystem development will dictate the pace of commercialization, making it difficult to see large-scale revenue realization before 2027. He cautioned the capital market: "We are currently in the R&D validation phase; if technical breakthroughs fall short of expectations, valuations will see significant corrections."
Amidst this trend, MicroLED optical interconnect CPO, leveraging its disruptive advantages in power consumption, offers a highly attractive solution to the "power wall" dilemma in AI data centers. However, the journey from the laboratory to the data center rack still requires crossing multiple chasms, including single-channel rates, optical coupling, industry chain synergy, and cost. The opportunity is structural, but the pace of commercialization depends on whether the entire industry chain can form an effective closed loop by 2027–2028. Until then, the capital market, while enthusiastically embracing this technology, may need to exercise greater rationality and patience.
Author | Yang Pengyue Editor | Qiu Jiangyong Art Editor | Malia Supervisor | Zhao Chen