Bernstein Report Maps AI Data Center Connectivity Evolution: From Pluggable to CPO by 2028

Futunn News Hong Kong

Overview

A Bernstein report outlines the likely progression for AI data center connectivity: from traditional pluggable modules to LPO/NPO, then CPO, and eventually optical I/O/optical fabric. Near-Packaged Optics (NPO) is highlighted as a balanced solution that places the optical engine closer to the ASIC without full integration, serving as a viable step before widespread CPO adoption. The report suggests large-scale CPO deployment for inter-rack connections is not expected until 2028, with small batch shipments anticipated in the second half of 2026 for scale-out scenarios.

In Depth

Background: The Evolving Landscape of AI Data Center Interconnects

The exponential growth of artificial intelligence has created unprecedented demands for data transfer speeds and efficiency within data centers. Traditional electrical interconnects and even early generations of optical modules are being pushed to their limits, necessitating a clear technological roadmap for future AI infrastructure. Bernstein’s comprehensive 97-page research report provides a detailed analysis of this evolving landscape, predicting the trajectory of AI data center connectivity technologies.

Key Findings: Bernstein’s Phased Approach to Optical Connectivity

The Bernstein report outlines a multi-stage evolution for AI data center connectivity, moving progressively towards more integrated optical solutions:

• Phase 1: Transition from Pluggable to LPO/NPO: The industry is expected to transition from conventional pluggable optical modules towards Linear-drive Pluggable Optics (LPO) and Near-Packaged Optics (NPO). LPO eliminates or significantly reduces the power-hungry Digital Signal Processors (DSPs) in the module, relying more on the host ASIC. NPO places the optical engine closer to the switch or compute ASIC on the PCB, reducing electrical trace lengths without full co-packaging.
• Phase 2: Emergence of CPO: Co-Packaged Optics (CPO), which integrates optical devices directly into the same package as the switching ASIC, represents the next major leap. The report highlights NPO as a crucial intermediate step, offering a pragmatic balance by bringing optics closer to the ASIC while maintaining a level of modularity that simplifies early adoption and deployment.
• Phase 3: Long-Term Vision of Optical I/O/Fabric: The ultimate vision includes optical I/O and optical fabric, where optics are deeply integrated into the chip and network fabric, potentially eliminating most electrical interconnects.

Crucially, the report provides specific timelines for CPO deployment:

• Limited CPO Shipments in Late 2026: Small batch shipments of CPO are anticipated in the second half of 2026, primarily for early scale-out scenarios and pilot projects. This indicates initial validation and testing in real-world environments.
• Large-Scale CPO Deployment by 2028: Widespread, large-scale deployment of CPO for critical inter-rack connections in AI data centers is not expected until 2028. This timeline reflects the significant engineering challenges associated with CPO, including thermal management, manufacturing complexity, and establishing a robust supply chain.

Technical Significance & Outlook: Strategic Planning for AI Infrastructure

The Bernstein report’s detailed roadmap offers invaluable guidance for stakeholders across the AI and optical networking industries. It emphasizes that while CPO is the long-term goal for ultimate efficiency and density, intermediate solutions like NPO will play a vital role in the coming years. This phased approach allows for gradual technological adoption, risk mitigation, and continuous innovation. Understanding these timelines is critical for chip designers, optical component manufacturers, and hyperscale data center operators to strategically plan their R&D investments, product roadmaps, and infrastructure upgrades, ensuring that AI’s insatiable demand for bandwidth and efficiency can be met sustainably in the decade ahead.