[News] TSMC Targets 2H26 COUPE on Substrate; NVIDIA Could Eye Long-Term Substrate Deals Amid CPO Push

As demand for high-speed transmission in AI data centers surges, TSMC is further advancing its co-packaged optics (CPO) roadmap. According to Commercial Times, TSMC recently disclosed that its “COUPE on Substrate” solution is expected to enter mass production in the second half of 2026. By extending COUPE to the substrate level, TSMC’s latest move suggests AI chip development is evolving beyond advanced process toward a new stage centered on co-packaged optics and system-level integration.

Notably, industry sources say that if CPO becomes the dominant architecture for future AI servers, NVIDIA may seek to secure high-end substrate capacity in advance through long-term agreements, prepayments, or strategic partnerships, aiming to avoid a repeat of the supply constraints previously seen in CoWoS and HBM.

As Commercial Times highlights, demand from AI GPUs, ASICs, and CPO could trigger another supply shortage of high-end ABF substrates by 2027. Compared with traditional CPU substrates, AI GPUs and ASICs require larger substrate areas and more layers, increasing ABF material consumption by 5 to 10 times. The report adds that continued growth in AI and high-end networking chips could keep advanced ABF substrate supply tight over the long term.

Commercial Times notes that as NVIDIA and cloud service providers (CSPs) continue pursuing higher rack efficiency and lower power consumption, key segments including foundry capacity, HBM, optical fibers, optical modules, and ABF substrates could increasingly become strategic resources that major AI companies seek to secure in advance.

NVIDIA Expands Optical Component Strategy

In addition, to accelerate its optical communications strategy, Commercial Times notes that NVIDIA recently announced deeper cooperation with Corning to expand its supply chain footprint for optical components used in AI data centers, aiming to secure sufficient capacity for future high-speed optical interconnects.

As part of the agreement, Corning is constructing three new facilities in Texas and North Carolina and says the expansion will create more than 3,000 jobs, as noted by CNBC.

Meanwhile, TrendForce notes that NVIDIA recently announced a US$4 billion investment, evenly split between Lumentum and Coherent, alongside multi-year procurement agreements securing priority access to advanced laser and optical components. The moves suggest NVIDIA is actively securing key components for future optical interconnect expansion while deepening its involvement in next-generation laser and photonic technologies.

TrendForce forecasts that co-packaged optics (CPO) will steadily increase its share of optical communication modules in AI data centers, with penetration potentially reaching 35% by 2030.

Read more

• NVIDIA Compute Architecture Paves the Way for Scale-Up Optical Interconnects; CPO Penetration in AI Data Centers Expected to Rise Steadily, Says TrendForce
• [News] Foxconn to Boost 2026 Capex by 30%; CPO Switches Reportedly Set for Q3 Mass Production

(Photo credit: NVIDIA)