Nvidia's Co-Packaged Optics Switches Enter Mass Production

Nvidia is making significant strides in its AI infrastructure strategy with the mass production of its Spectrum-X co-packaged optics (CPO) switches. This shift matters as networking becomes an increasingly important bottleneck in large AI clusters.

The CPO switch integrates optical components more closely with networking silicon, reducing power consumption and improving bandwidth as data moves across massive AI systems.

GF Securities analyst Alicia Xia noted that supplier preparations are accelerating alongside the ramp-up of Spectrum-X CPO switches. TSMC has expanded its CPO testing and inspection equipment footprint to support robust capacity ramp.

Nvidia's NVL576-based scale-up systems using CPO or near-packaged optics are expected to begin adoption in the second half of 2027. GF Securities also expects Trainium 4 to include multiple configurations, with two likely using near-packaged optics and potentially adopting Nvidia's NVLink Fusion.

The successful rollout of CPO switches could reinforce Nvidia's push to capture more AI-system spending beyond GPUs, including networking and interconnects. Investors should watch TSMC capacity expansion, supplier readiness, and adoption of NVLink Fusion by hyperscalers like Amazon.