For decades, copper carried the internet on its back. It threaded through server racks, snapped into Ethernet ports, linked chips to switches, and did it all with quiet dependability. Electrons racing through metal powered backplanes, patch cords, and direct-attach cables. Copper was cheap, familiar, and fast enough. Then generative AI changed the definition of “fast enough.”
Models with trillions of parameters and GPU clusters that fill entire warehouses have forced data centers into a new era. Moving data now demands as much ingenuity as processing it. At 400 and 800 gigabits per second, copper links grow finicky. At 1.6 terabits, they brush up against hard physical limits. Signals weaken over distance, resistance bleeds power into heat, and the equalization circuitry needed to clean everything up becomes intricate and energy-hungry. The constraint is no longer only the chip. It’s the connection between chips.
That reality is fueling the push toward co-packaged optics (CPO), an architecture that tucks optical engines directly alongside the switch ASIC within a single package. Instead of driving high-speed electrical signals across inches of circuit board to reach a pluggable module, the path shrinks to mere millimeters. Data is converted into light almost at the source and transmitted over fiber. The result: lower power consumption, cleaner signal integrity, and a far clearer path to scaling bandwidth without overheating entire racks.
Few companies are more exposed to this shift than Nvidia. After turning GPUs into the foundation of the AI boom, Nvidia now sells something closer to full AI factories—compute, storage, and vast networking fabrics that tie tens of thousands of accelerators together. Keeping that fabric primarily on copper is becoming increasingly unrealistic.
That’s why Nvidia’s deepening relationships with Lumentum and Coherent carry strategic weight. By committing billions of dollars and locking in long-term supply agreements, Nvidia is effectively reserving the photonics manufacturing capacity needed for large-scale CPO rollout. Lumentum and Coherent produce the lasers and optical components that convert electrical signals into photons. In a co-packaged future, those devices sit shoulder-to-shoulder with advanced silicon inside the same module.
Copper, of course, won’t vanish overnight. Direct-attach copper remains effective for very short runs, and active electrical cables (AEC) have extended its life by embedding signal-conditioning chips in the connectors to bolster high-speed transmission. But those enhancements draw additional power and complicate thermal management right at the port. As speeds move past 800 gigabits per second, even powered copper begins to look transitional—a stopgap rather than a long-term solution.
That poses a strategic challenge for companies centered on active electrical connectivity, including players like Credo Technology Group. Credo and similar firms specialize in high-speed SerDes and retimer technologies that keep copper viable at extreme data rates. In the near term, AI infrastructure buildouts can still lift demand as hyperscalers stretch copper within racks. But if co-packaged optics becomes the standard, the highest-value segment of the interconnect stack may migrate toward integrated photonics. Active-copper specialists would then need to pivot—either embracing optical technologies or developing hybrid electrical-optical approaches.
Optical connector manufacturers face a subtler shift. The migration from copper to fiber inside data centers is a structural tailwind: more fiber links mean rising demand for precision alignment, ultra-low-loss connectors, and dense patching systems. Yet CPO reduces reliance on traditional pluggable transceivers at the switch faceplate, reshaping where connectors live and how they’re deployed. Instead of rows of hot-swappable modules, future switches may channel fiber directly from on-package optical engines to front-panel or even backplane fiber arrays. Companies strong in high-density, low-loss optical connectivity could benefit—but only if they adapt to tighter integration, automated assembly, and emerging mechanical standards built around CPO.
The broader implication is strategic as much as technical. Optical manufacturing capacity is limited, and those who secure it early help define the architecture of next-generation AI infrastructure. By aligning closely with Lumentum and Coherent, Nvidia is signaling that the era of electrons racing across dense copper traces is yielding to photons launched almost directly from the chip itself.
Fiber once supplanted copper across continents and oceans. Now it is doing so within the server. Copper enabled the first great surge of networked computing. The next wave may well be carried by light.
