Organization: The Micro LED CPO industry is expected to gradually enter the implementation phase after 2027

CITIC Securities believes that as AI computing power infrastructure continues to grow in scale and complexity, and as the industry chain gradually matures, Micro LED CPO is expected to become an important solution for medium-range optical interconnects due to its advantages in power consumption, speed, and stability. Currently, the industry is still in the early preparation and R&D stage, with core bottlenecks in light-emitting chip performance and optical system integration. The industry is expected to gradually move into deployment after 2027. From the perspective of benefiting opportunities, it is recommended to focus on companies with leading Micro LED chip manufacturing capabilities and strong vertical industry integration advantages.

Great Wall Securities believes that driven by generative AI, data centers’ demand for high-speed transmission is continuously increasing. Traditional short-distance copper cabling solutions within cabinets are facing severe challenges in transmission density and energy consumption. In comparison, Micro LED co-packaged optical (CPO) solutions demonstrate potential as a replacement due to their lower unit transmission energy consumption, reducing overall energy use to 5% of copper cabling solutions, significantly improving system power efficiency. Compared to traditional laser cables and copper cables, Micro LED solutions show notable differences: lasers consume high power that increases with speed and have lower reliability, using a “narrow and fast” architecture (few high-speed serial channels); copper cables, while passive with near-zero power consumption and high reliability, have limited transmission distances of less than 2 meters at high speeds and are affected by electromagnetic interference. MicroLED, based on a “wide and slow” architecture (hundreds of low-speed parallel channels), maintains the advantage of long-distance optical transmission while achieving low power consumption and high reliability that lasers cannot match. Additionally, with redundancy mechanisms, its time failure rate (FIT) can be kept below 10, comparable to copper cables.