Citi believes that as the scale of AI infrastructure expands at an accelerated pace, the market for the four core CPO components—FAU/connectors, ELSFP (external laser source), optical interconnect modules, and fiber trays—will experience an order of magnitude leap in 2027, with the combined market size for these four component types potentially exceeding 185 billion yuan by 2028.
Citi's latest estimates indicate that by 2028, the CPO-driven FAU/connector market will reach approximately 10.5 billion yuan, ELSFP about 29.6 billion yuan, optical interconnect modules about 89.6 billion yuan, and fiber trays about 55.7 billion yuan.
2027 is identified as a crucial inflection point for explosive growth—the year-over-year increase in the FAU/connector market is expected to exceed 3400%, ELSFP over 2600%, fiber trays over 3200%, and optical interconnect modules by tens of thousands of times. In 2028, the markets for these four component types will further achieve more than double growth on top of the high base established in 2027.
The aforementioned growth prospects are predicated on the phased rollout of NVIDIA's CPO roadmap. Based on information from Citi's analysis of the 2026 GTC and OFC conferences, Kyber is expected to be launched first with the Vera Rubin Ultra. The deployment of CPO in the Rubin series will adopt a hybrid transition approach, while Feynman Kyber 1152 will be fully CPO-enabled.
<h2>Switch Demand: Jumping from 5,000 Units to Nearly 700,000 Units in Less Than Three Years</h2>
Citi maintains its forecast for CPO switch demand at 300 units in 2025, 5,000 units in 2026, and 209,000 units in 2027. Specifically, scale-out demand is projected at 300 units, 5,000 units, and 40,000 units, respectively; scale-up demand will add approximately 169,000 units starting from 2027.
For 2028, Citi has introduced a demand assumption of approximately 691,000 CPO switches for the first time—with scale-out demand around 100,000 units and scale-up equivalent scale estimated at about 591,000 units.
The above forecast is modeled based on approximately 7 million Rubin Ultra GPU chips or about 48,600 NVL576 racks (at a 60% deployment rate). Compared to the 5,000 units in 2026, the projected volume for 2028 signifies a nearly 140-fold scale expansion in less than three years.
In terms of specification assumptions, Citi has updated the reference model for CPO switches from the previous Spectrum SN6800 to Spectrum SN6810 for 2026 to 2028, adjusting the number of optical engines per switch to 32 and ELSFP units to 16. Citi believes the SN6810 is more suitable for medium-scale AI cluster deployment scenarios.
<h2>Four Component TAM: Each with a Focus, Optical Interconnect Modules Have the Largest Volume</h2>
FAU/Connectors: Citi forecasts that the CPO-driven market size will surge from approximately 110 million yuan in 2026 to about 3.94 billion yuan in 2027, expanding further to about 10.5 billion yuan in 2028. The incremental demand covers both scale-out and scale-up network requirements.
ELSFP: The corresponding market size is expected to increase from approximately 410 million yuan in 2026 to 11.2 billion yuan in 2027, and then to about 29.6 billion yuan in 2028, with year-over-year growth exceeding 2600% in 2027.
Optical Interconnect Modules (Fiber Shuffle): This category has the largest TAM among the four components. Citi projects the market size to be about 34.3 billion yuan in 2027 and 89.6 billion yuan in 2028. The incremental volume is primarily driven by the large-scale deployment of Rubin Ultra racks, creating inter-rack scale-up interconnect demand. In 2028, this segment will account for nearly half of the total market for the four component types.
Fiber Trays: Citi forecasts the market size to be about 24 billion yuan in 2027 and 55.7 billion yuan in 2028, mainly driven by NVL576 rack deployments, with year-over-year growth exceeding 3200% in 2027.
Overall, the core demand driver from 2027 to 2028 is shifting from scale-out networks to scale-up networks. The latter brings significantly higher component demand volume than the former, and this structural transformation is the fundamental reason for the order of magnitude leap in market size in 2027.
<h2>CPO Migration Route: Three-Stage Framework Faces Supply Chain Bottlenecks</h2>
Citi has outlined a three-stage framework for CPO migration:
<blockquote>
Stage 0: CPO adoption for scale-out networks, expected to commence in the second half of 2026 with the launch of Spectrum CPO.
Stage 1: Rack-to-rack scale-up, tied to the product cycles of Rubin/Rubin Ultra.
Stage 2: Deep intra-rack scale-up, with full CPO adoption in the Feynman architecture.
</blockquote>
Citi believes this phased rollout aligns with previous market perceptions of supply chain readiness. Ayar Labs has indicated that the current adoption of a hybrid approach combining copper interconnects with CPO is due to the supply chain not yet being fully prepared for comprehensive CPO integration, which provides cross-validation for Citi's gradual assumption.
Lumentum's capacity expansion plans, coupled with an 85% compound annual growth rate for indium phosphide optical channels, paint a picture of tight supply and demand. Supply-side constraints are unlikely to be fundamentally resolved in the short term. This could act as a limiting factor for large-scale CPO adoption while simultaneously supporting the pricing levels of related components.
<h2>Key Risks: Deployment Uncertainty and External Variables</h2>
There is significant divergence in market views regarding the pace of CPO deployment. Citi notes that Asian investors generally consider its forecast of 209,000 CPO switches in 2027 to be within a reasonable range (market consensus is 250,000-350,000 units), while US investors deem this assumption too aggressive (market expectation is over 100,000 units).
Citi admits that its CPO component TAM calculations involve a degree of uncertainty, and its market size assumptions for some components may represent a more optimistic scenario.
Core downside risks are concentrated in: whether global AI demand expansion can sustain the current infrastructure investment intensity; whether challenges in CPO technological maturity and supply chain integration will lead to deployment delays; and whether supply constraints for critical upstream components like optical chips can be effectively resolved before key milestones.
External variables, such as potential supply chain disruptions and the evolving competitive landscape within the CPO ecosystem, are also risk factors that investors need to consider.
Citi's analysis indicates that if NVIDIA's CPO roadmap progresses as scheduled, 2027 to 2028 will be a window for concentrated demand release for the four core components. However, the actual execution progress of the roadmap remains the key variable determining whether market size can be realized as anticipated.

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Citi expects switch demand to increase 140-fold within three years. If NVIDIA's CPO roadmap progresses as planned, the four core CPO components—FAU/connectors, ELSFP (external laser source), optical interconnect modules, and fiber trays—will see exponential year-over-year growth in 2027, reaching tens of times the current volume. This growth is projected to double again in 2028 on top of the high 2027 base, with the total market size exceeding 185 billion yuan

- Citigroup predicts a significant market leap for core components in the CPO market, with combined revenues potentially surpassing 185 billion RMB by 2028.  
- Key growth drivers are identified as the transition from scale-out to scale-up networks, particularly influenced by demand for FAU/connectors, ELSFP, fiber interconnect modules, and fiber trays.  
- However, risks include deployment uncertainties and supply chain constraints, which may impact the anticipated demand levels and the overall pace of CPO integration.

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Citi Strongly Supports CPO: Four Core Component Markets to See Exponential Outburst in 2027-2028