Himax is a potential WLO supplier for Nvidia and TSMC, and is expected to benefit from the adoption of silicon photonics technology in AI chips and advanced packaging processes.

Conclusion: Himax is expected to enter the supply chain of TSMC's CPO and Nvidia's next-generation AI chip Rubin with its WLO technology advantages and close cooperation with Fiberxon. Looking ahead, CPO will be essential for AI server/HPC chip design, so the WLO business is expected to become a long-term strong growth driver for Himax.

TSMC's technological breakthrough: TSMC plans to launch a co-packaged optics (CPO) solution integrating CoWoS and Compact Universal Photonic Engine (COUPE) in 2026, aiming to address the increasing transmission speed demands of AI chips due to enhanced computing power. For TSMC, only by solving the transmission bottleneck can customers continue to benefit from the computing power growth brought by advanced processes.

Nvidia's next move: To maintain its competitive advantage in the AI chip business, Nvidia is expected to adopt CPO in its next-generation AI chip Rubin series after Blackwell. Currently, Rubin and Rubin Ultra are scheduled for mass production in 2026 and 2027, respectively, with Rubin Ultra likely to be the first to adopt CPO.

Future applications of CPO: The future trend of AI server and HPC chip design will focus more on maximizing transmission efficiency through CPO technology to leverage the computing power upgrades provided by advanced processes. Notably, CPO also helps address heat dissipation issues under high-speed computing.

Fiberxon leads in TSMC's CPO supply chain: Fiberxon will outpace competitors by producing fiber array units (FAUs) and in-system optical fiber jumpers in small quantities in 2025, using its Reflowable Lens-type Fiber Array Connector (ReLFACon) technology to improve FAU packaging accuracy. Based on capital expenditure plans, Fiberxon is expected to mass-produce CPO components in 2026.

Himax's WLO business is expected to become a medium-to-long-term strong growth driver: Himax holds a 5.3% stake in Fiberxon, and the two companies collaborate closely. Himax's WLO technology advantages contribute to ReLFACon design and manufacturing strengths, benefiting FAU sales. WLO demand from the CPO business is expected to start contributing revenue in 4Q24 (mainly through technical validation and trial production), grow steadily in 2025, and accelerate significantly from 2026 onward.

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