Silicon photonics expected to dominate AI growth, TSMC vice president says

• By Lisa Wang / Staff reporter

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Silicon photonics would play a dominant role next year and make chip-level co-packaged optics (CPO) packaging possible, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday.

“For years, critics questioned the reliability of CPO. The doubts are being thoroughly dismantled by real-world data and market validation,” TSMC vice president K.C. Hsu (徐國晉) said at a SEMI forum in Taipei.

The company is on track to enter production of CPO later this year, Hsu said in another forum arranged by Imec in Taipei yesterday, about four months after TSMC announced its progress in CPO development in May.

Taiwan Semiconductor Manufacturing Co vice president of advanced packaging technology development K.C. Hsu speaks at a technology forum in Taipei yesterday

Photo: Lisa Wang, Taipei Times

Imec is the world’s leading independent research and innovation hub in nanoelectronics and digital technologies.

As server racks and data centers are expanding to handle massive artificial intelligence (AI) workloads, networks are being pushed to their limits, and that has stimulated demand for optics, the “nerve system” of data centers, Hsu said.

Last year, optical transceiver sales recorded a 25 percent growth from the previous year, with high-end products growing the fastest by 60 percent, he said.

The growth of optical transceiver sales is to accelerate this year at an annual rate of 50 percent, driven by increasing AI infrastructure expansion worldwide, Hsu said.

Next year, silicon photonics is to emerge as a dominant sales platform and on track to command more than 50 percent of the market, he said.

In 2028, AI technology upgrades would trigger a “massive new” wave of growth, he said.

To meet that demand, the underlying technology of optical transceivers is undergoing a permanent construction shift, Hsu said.

TSMC would utilize its compact universal photonic engine on a single packaged substrate, a type of CPO technology, and that would offer more than 10 times power efficiency compared with traditional copper wire-based applications, he said.

“The co-packaged optics is being adopted faster than originally expected,” Imec vice president Philippe Absil said. “I’ve seen market reports that were showing very moderate and gradual adoption, moving into 2030 when it could mean something in terms of markets.”

However, another report showed that the CPO would deliver five times the size of the traditional market today, showing that the growth is much higher than expected, he said.