TAIPEI (Taiwan News) — TSMC Vice President Hsu Kuo-chin (徐國晉) said Monday that silicon photonics is gaining momentum as AI workloads push data center networks toward their physical and power limits.
Hsu said at a silicon photonics forum that silicon photonics could account for more than 50% of the optical transceiver market in 2027, per Liberty Times. He said some companies are expected to begin mass production of co-packaged optics (CPO) products in the second half of this year.
Hsu said AI is creating not only software challenges but also physical and power constraints as data centers handle rapidly increasing computing workloads. Optical transceivers are becoming important to data center infrastructure, with global sales rising 25% in 2025 and projected to increase another 50% this year, he said.
Demand for higher-speed products is also accelerating, per CNA. Sales of optical transceivers supporting speeds of 100G and above doubled in 2024 and increased another 60% in 2025, Hsu said.
Hsu said Taiwan's semiconductor foundry ecosystem can produce optical engines at scale and with high precision, making CPO the ultimate application of silicon photonics. He said concerns over CPO have eased as real-world data and market validation have accumulated.
The semiconductor industry has broadly embraced silicon photonics, Hsu said, but scaling up the technology will require progress across other parts of the supply chain, including lasers, fiber-optic connectors, and testing.
