Equity research
2026.07.06 22:06

Morgan Stanley: CPO Update

> Rapid Scale-Out CPO Growth: CPO switch shipments are expected to grow from 23k units in 2026 (mostly 100T switches led by NVIDIA's Spectrum) to 59k in 2027, and reach 200k units by 2030, representing a 144% CAGR from 2024 to 2030.

> Coupling Mainstream: Grating coupling remains the mainstream choice for TSMC's $Taiwan Semiconductor(TSM.US) COUPE platform and major customers (NVIDIA, AMD, Ayar Labs), with mass production expected to begin soon in 2H26.

> PIC Capacity Ramping: TSMC plans to expand Photonic Integrated Circuit (PIC) capacity from 10k wafers per month (kwpm) in 2026 to 15kwpm in 4Q26, and to at least 25kwpm by 2028.

> Customer Pipeline: Due to limited initial capacity, primary mass-production customers for 2026–2027 are expected to be NVIDIA $NVIDIA(NVDA.US), Broadcom $Broadcom(AVGO.US), and AMD $AMD(AMD.US). In 2028, MediaTek, Marvell, and Ayar Labs are projected to scale up.

> Testing Bottleneck Easing: Wafer-level testing (Insertion 2) times have vastly improved from an entire day per wafer in 2H25 to six hours per wafer today, with a 3–4 hour target in sight for the next 6–12 months.

Technology Spotlight: GlassBridge vs. Traditional FAU

> GlassBridge Potential: Corning’s $Corning(GLW.US) GlassBridge (a wafer-based glass interposer solution using waveguides) offers great scaling, high density, and detachment features, but is still far from mass production.

> FAU Resilience: Traditional Fiber Array Units (FAU) remain the highly customized, lowest-loss mainstream choice. Analysts do not expect GlassBridge to disrupt high-end players like TFC in the near term, as it is more likely to compete with low-end edge-coupling FAUs first.

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