BofA: Optical FAUs

🚀 CPO and FAU Market Outlook

> Market Take-off: Nvidia's CPO switch volume is expected to remain relatively low in the near term. A meaningful volume is projected to take off in 2028–2029 as scale-up penetration increases.

> Shipment Forecasts: BofA expects Nvidia CPO switch shipments to reach 14k units in 2026E, 52k in 2027E, and 190k in 2028E.

> Massive TAM by 2030: The Total Addressable Market (TAM) for FAUs in Nvidia CPO switches is projected to reach US$8 billion by 2030E, based on an estimated 1.4 million CPO switch units.

> BOM Contribution: FAUs are expected to contribute 5% to 10% of the CPO switch Bill of Materials (BOM), with an Average Selling Price (ASP) ranging from US$80 to US$200.

⚙️ Key Technical Barriers to Entry

> Micron-Level Alignment: Pitch tolerance must be controlled at < +/- 0.5 um (for NPO) or even < +/- 0.3 um (for CPO) to prevent linear error accumulation and ensure low-loss transmission.

> Automation Requirements: As channel counts rise from 20–36 to 60–100, manual alignment is becoming unsustainable. In-house automatic alignment and testing are critical for consistent quality and yield.

⚡ GlassBridge is Not an Immediate Threat

> Early Stage: Despite market concerns, Corning’s wafer-based GlassBridge solution is in its infancy and unlikely to be adopted in current or next-generation CPO designs.

> Existing Bottlenecks: GlassBridge faces horizontal "edge coupling" limitations, including misalignment with the Photonic Integrated Circuit (PIC) due to uneven surfaces, space constraints, extreme alignment requirements, and the inability to conduct wafer-scale testing.

$Corning(GLW.US) $Marvell Tech(MRVL.US) $Broadcom(AVGO.US) $Himax Tech(HIMX.US) $Lumentum(LITE.US) $Coherent Corp.(COHR.US) $Fabrinet(FN.US) $NVIDIA(NVDA.US) $TSMC