[News] Mapping the Micro LED Optical Interconnect Ecosystem

As AI data centers continue to scale, power consumption and bandwidth bottlenecks in chip-to-chip interconnects are becoming increasingly difficult to address. Against this backdrop, Micro LED-based co-packaged optics (CPO) is emerging as a promising alternative. By replacing traditional high-speed serial architectures with a “wide-and-slow” parallel optical approach, the technology transmits data through hundreds of low-speed optical channels operating simultaneously.

This architecture eliminates the need for several power-hungry components—including DSPs, ADC/DACs, and CDRs—reducing energy consumption to just 1–2 pJ/bit. Overall system power is targeted at roughly 5% of that required by copper-cable solutions. In addition, Micro LED arrays can integrate more than 400 channels within a footprint of less than 1 mm², offering a compact structure, high reliability, and reduced sensitivity to temperature fluctuations.

Although transmission distances are currently limited to less than 10 meters, Micro LED CPO is well suited to scale-up interconnects within AI server racks—a use case that neither copper cables nor silicon-photonics-based CPO can fully address. As a result, the technology has attracted growing interest from global technology leaders and semiconductor companies, triggering a wave of partnerships and ecosystem-building efforts.

Global Players Race to Define the Micro LED CPO Market

The Micro LED CPO industry remains in an early stage, with standardization efforts progressing alongside technical development. Key specifications—including chip dimensions, per-channel data rates, transmission distances, and whether receivers should use photodiodes (PDs) or CMOS sensor arrays—have yet to be finalized.

In this context, competition today centers on influencing future standards, with alliances and resource integration emerging as the preferred strategy. Early participants range from major technology companies such as Microsoft and Marvell to startups including Avicena and Hyperlume.

Microsoft’s MOSAIC architecture exemplifies the “wide-and-slow” philosophy. While a conventional 800Gbps optical link typically consists of eight 100Gbps channels, MOSAIC distributes data across 400 parallel 2Gbps optical channels arranged in a 20×20 array occupying less than 1 mm².

The lower per-channel data rate significantly simplifies signal equalization requirements and eliminates the need for DSPs, ADC/DACs, and CDRs. Power consumption is reduced to 3.1–5.3W, representing a 56–68% improvement over mainstream optical-link solutions. The use of multicore imaging fiber further tackling wiring challenges associated with hundreds of parallel optical channels.

Avicena has taken a different approach with its LightBundle platform, pairing GaN-based Micro LED arrays with PD receivers. Leveraging advanced semiconductor manufacturing processes from TSMC, the solution delivers a baseline bandwidth of 512Gbps, scalable to 896Gbps, while maintaining energy efficiency of 1–2 pJ/bit and stable transmission over distances of up to five meters.

In March 2026, Avicena signed a joint development agreement with ams OSRAM. The partnership is expected to accelerate commercialization by combining LightBundle with ams OSRAM’s mass-production expertise in automotive Micro LED technologies.

Meanwhile, Marvell, a leading supplier of optical networking DSP, has partnered with Mojo Vision in a strategic move to maintain relevance in a future where DSPs may no longer be required in certain optical interconnect architectures.

High-speed connectivity specialist Credo directly acquired Canadian startup Hyperlume in the third quarter of 2025. The company plans to launch a new category of Active Light Cable (ALC) products offering reliability comparable to AEC copper cables while extending transmission distances to 30 meters. Sample shipments are expected in fiscal 2027, followed by volume production ramp-up in fiscal 2028.

While major technology firms and startups have collectively outlined the early framework of the Micro LED CPO ecosystem, significant differences remain in chip specifications, receiver architectures, and system integration approaches. Industry-wide standards are still several years away, making the next two to three years a critical period for specification battles and market positioning.

China’s Emerging Micro LED CPO Ecosystem

Companies in Chinese Mainland and Taiwan have adopted distinct strategies for entering the Micro LED CPO market.

In Chinese mainland, participation has been more diversified. Traditional LED manufacturers are expanding into optical communications, while cross-industry collaborations seek to accelerate technological breakthroughs. Most projects remain in the sample-development and customer-validation stage, though commercialization efforts are steadily advancing.

Companies with active Micro LED CPO initiatives include HC SemiTek, MTC, San’an, Changelight, Chip Foundation, Leyard, Saphlux, Azure, and SmartSens.

Taiwan-based companies, by contrast, are pursuing vertically integrated strategies. Display makers and LED manufacturers are leveraging internal group resources to establish end-to-end supply chains spanning light sources, detectors, and modules before industry standards are finalized.

Among the most notable examples is AUO, which has integrated LED supplier Ennostar and photodiode maker Tyntek into its ecosystem. By adopting a glass-RDL interposer solution, AUO allows customers to deploy Micro LED CPO without investing in their own mass-transfer production lines, largely lowering adoption barriers. The company has already begun system-level CPO validation with international AI and optical communications customers and expects commercialization to progress over the next two to three years.

In late May, AUO also announced a strategic partnership with French Micro LED specialist Aledia to develop next-generation display technologies combining high brightness, low power consumption, and high resolution. The collaboration could eventually expand into optical communications applications.

PlayNitride has entered into cooperation with Brillink, while Innolux is widely viewed as a potential beneficiary of its subsidiary’s electro-optical packaging capabilities, strengthening its vertical integration strategy and competitive positioning.

CPO Reshapes the Value Proposition of Micro LED

Whether through vertical integration in Taiwan, cross-sector partnerships in Chinese mainland, or strategic alliances among overseas technology companies, Micro LED CPO deployments today remain largely focused on sampling and qualification programs. Large-scale shipments have yet to materialize. The key questions for the industry now lie in when market adoption will accelerate, how large the potential could become, and how Micro LED CPO will interact with the broader Micro LED ecosystem.

According to TrendForce, the global market for AI-focused optical transceiver modules is expected to grow from USD 16.5 billion in 2025 to USD 26 billion in 2026, representing annual growth of more than 57%. Modules operating at 800G and above are projected to account for over 60% of the market in 2026, laying a solid foundation for broader CPO adoption.

Against this backdrop, TrendForce forecasts that CPO penetration in AI data center optical modules will rise from approximately 0.5% in 2026 to nearly 35% by 2030.

Shipments of Micro LED CPO optical transceiver modules are expected to begin ramping in the second half of 2028, with the market projected to generate approximately USD 848 million in revenue by 2030.

Beyond enabling more efficient AI data-center interconnects, Micro LED CPO is expected to create meaningful spillover benefits for the display industry. Manufacturing capabilities developed for optical interconnect applications—including ultra-miniaturized Micro LED chips, higher-precision mass transfer processes, and stringent yield-management expertise—are likely to migrate into display production, helping reduce manufacturing costs and accelerate adoption in consumer markets.

Looking ahead, display and optical communication applications are expected to reinforce one another, creating a dual-engine growth model for the Micro LED industry and driving the technology toward large-scale commercialization.

(Photo credit: OSRAM)