Linear Pluggable Optics (LPO) Undergoing Extensive Evaluation in AI Data Centers for Up to 25% Power Reduction by Eliminating DSP in Short-Reach Connections

July 5, 2026

Optical Connections USA

Overview

Linear Pluggable Optics (LPO) modules are undergoing extensive evaluation in AI data centers for short-reach connections, driven by their potential to reduce power consumption by up to 25% through the elimination of Digital Signal Processing (DSP) chips. LPO’s DSP-free architecture also contributes to cost savings and latency reduction, making it an attractive option for specific infrastructure environments. Leading optical transceiver vendors are accelerating efforts in LPO solution development and standardization.

In Depth

Key Findings

Linear Pluggable Optics (LPO) modules are gaining significant attention and undergoing extensive evaluation within the industry as a critical solution for reducing power consumption in short-reach connections within AI data centers. By obviating the need for expensive and power-hungry Digital Signal Processing (DSP) chips, LPO holds the potential to reduce power consumption by up to 25% compared to conventional DSP-based pluggable optical modules.

Technical / Clinical Details

The core of LPO technology lies in optimizing the performance of modulators, drivers, receivers, and transimpedance amplifiers (TIAs) to enhance signal linearity. This minimizes signal distortion, enabling high-speed data transmission without the complex compensation processing typically performed by DSPs.
Specifically, LPO supports various data rates, including 200G, 400G, and 800G, making it ideal for applications in environments with relatively good signal quality, such as intra-rack connections or very short inter-rack links. The absence of a DSP not only reduces module manufacturing costs but also shortens optical module latency, thereby improving the real-time processing capabilities of AI/HPC clusters.
Leading optical transceiver vendors are actively engaged in promoting LPO interoperability and standardization, aiming to establish a robust ecosystem.

Background & Context

In AI data centers, the scaling of GPU clusters demands hundreds of gigabits to terabits of interconnect bandwidth. However, high-performance DSP chips are costly and consume significant power, imposing a substantial burden on data center operational costs and thermal management. Particularly for short-reach connections, the complex functionalities of DSPs are often unnecessary, leading to a demand for simpler, more power-efficient solutions. LPO has emerged as an optimal choice for this specific niche, serving edge or Top-of-Rack (ToR) switches within data centers.

Strategic Significance & Outlook

The extensive evaluation and deployment of LPO could bring about a significant shift in AI data center design philosophy. LPO and conventional DSP-equipped optical modules are expected to play complementary roles, addressing different distance and application requirements. The widespread adoption of LPO will provide data center operators with more cost-effective and power-efficient options for specific connections, contributing to a reduction in overall Total Cost of Ownership (TCO). The LPO market is projected for significant growth by 2027, becoming an important component of AI infrastructure.

Source: https://www.optical-connections.com/news/lpo-ai-data-centers-evaluation/

Get our weekly technology intelligence — free

Receive an infographic that lets you judge at a glance whether each field’s analysis report is worth reading.

Subscribe Free — Weekly Tech Intelligence

By subscribing, you’ll receive Troy-Technical’s weekly technology intelligence newsletter.