VCSEL NPO Moves Onto the AI Scale-Up Roadmap as Copper Losses Rise at 1.6 Tbps
TrendForce’s October 8, 2026 outlook places VCSEL near-packaged optics on the development path for AI data-center scale-up links. It forecasts overall VCSEL demand of 650 million units in 2031 and a 38% CAGR from 2025 to 2031, while expecting multiple NPO solutions from 2027 to 2028. Supplier strategies divide between mature 850 nm architectures with aggregate bandwidth up to 3.2 Tbps and higher-cost 1,060 nm designs that improve several optical characteristics. The forecast describes market direction and R&D activity rather than present orders, spot demand, supply availability, or pricing.
A Forecast With a Defined Commercial Boundary
TrendForce’s October 8, 2026 release projects that VCSEL market demand could reach 650 million units in 2031, corresponding to a compound annual growth rate of 38% from 2025 through 2031. The projection is tied to the expected emergence of VCSEL near-packaged optics and continuing demand for short-reach optical transceiver modules. It is a category-level demand outlook, not a disclosed volume for VCSEL NPO alone and not a report of purchase orders already placed.
The expected launch window is also forward-looking. TrendForce anticipates that multiple VCSEL NPO solutions will appear from 2027 to 2028 as AI data-center scale-up networks require greater transmission capacity. Six suppliers are identified as active in development: Lumentum, Furukawa Electric, Coherent, Broadcom, ams OSRAM, and HiSilicon. Their presence establishes a competitive R&D field, but it does not establish that the six programs share the same readiness, qualification stage, manufacturing scale, or commercial terms.
No current order total, spot-demand measure, shipping volume, inventory position, lead time, committed capacity, allocation level, or price appears in the release. The forecast can support a long-range technology and supplier map. It cannot support a claim that VCSEL NPO is currently in shortage, broadly available, or priced in a particular direction.
Copper Attenuation Changes the Scale-Up Link Budget
The architectural pressure begins with the electrical link. In AI scale-up networks, active electrical cables use multiple retimers to mitigate data loss and signal attenuation. TrendForce states that high-frequency electrical attenuation over copper rises significantly as transmission speeds enter the 1.6 Tbps generation. Short-distance interconnects are therefore expected to move more quickly toward optical technologies, including VCSEL NPO and Micro LED co-packaged optics.
That observation defines a change in the engineering trade space. TrendForce identifies multiple retimers as the AEC mechanism for addressing data loss and attenuation, but it does not publish a length threshold, port count, retimer count, installed share, or transition date at which AEC becomes unsuitable. It also does not declare that optical links have already replaced AEC in deployed platforms.
The evidence supports a directional conclusion. The 1.6 Tbps generation strengthens the technical case for optical interconnects in short-reach scale-up systems. The evidence does not convert that case into immediate component demand. Platform schedules, architecture choices, qualification results, and actual sourcing commitments remain outside the published data.
Wavelength Strategy Separates Cost and Performance
The supplier map divides into two principal wavelength paths. Coherent, Broadcom, ams OSRAM, and HiSilicon are associated with mature 850 nm VCSELs coupled with photodiodes. TrendForce reports aggregate bandwidth of up to 3.2 Tbps for these configurations. Their limiting factor is chromatic dispersion, which restricts further expansion of reach and bandwidth. The aggregate figure must remain distinct from a per-device or per-channel rate.
Lumentum and Furukawa Electric have adopted 1,060 nm VCSEL approaches, and Coherent plans to pursue that route as well. The 1,060 nm technology carries higher cost but offers high fiber-coupling efficiency, lower dispersion, lower relative intensity noise, and stronger performance at elevated operating temperatures. Those characteristics align with future increases in transmission speed, while the higher-cost qualifier prevents the route from being treated as a universal replacement for 850 nm.
Both paths can satisfy high-density transmission requirements in AI data centers according to TrendForce. The practical distinction is therefore not a simple ranking of one wavelength over another. It is a balance among aggregate bandwidth, optical reach, coupling, noise, thermal behavior, and cost. The release provides no standardized product matrix or commercial comparison across the six suppliers, so any program-level conclusion remains prospective.
AEC, VCSEL NPO and Micro LED CPO Occupy Different Positions
AEC, VCSEL NPO, and Micro LED CPO address short-reach scale-up interconnects with different media and levels of integration. AEC is an electrical copper solution assisted by retimers. VCSEL NPO moves the optical conversion near the ASIC or GPU while retaining a near-packaged structure. Micro LED CPO integrates the optical path through a co-packaged architecture. The distinctions affect electrical loss, optical coupling, maintenance flexibility, density, and supply-chain maturity.
TrendForce notes that VCSEL NPO and Micro LED CPO both require arrays of optical emitters and receivers to be integrated with ASIC or GPU devices to achieve low power consumption and very high transmission density. Micro LED CPO has long-term potential to approach the theoretical energy-per-bit limit. It still faces development work in mass transfer, optical-fiber compatibility, coupling efficiency, and supply-chain maturity.
VCSEL NPO is described as having more mature commercial conditions in energy per bit, maintenance flexibility, and supply-chain completeness. That is a relative assessment within the technology comparison. It does not prove that qualified parts are available for every architecture, that supply is sufficient, or that deployed economics already favor NPO. The release establishes a readiness narrative, not a transaction record.
Device Scaling Defines the Next Technical Gate
Future VCSEL NPO work extends from the optical interface down to the emitter. One development direction is a better match between VCSEL wavelength and fiber technology. Another is an increase in the data rate of an individual VCSEL from 100G toward the 200G standard. Higher-density multichannel arrays can then raise aggregate transmission bandwidth.
TrendForce also identifies Micro VCSEL devices with individual dimensions of 100 to 200 µm as a development focus. Smaller emitters enable higher-density multichannel arrays, providing another route to greater transmission bandwidth. The size range is a research and development target, not proof that standardized 100–200 µm components are broadly orderable today.
The market outlook and technical roadmap are linked but not equivalent. A 650 million-unit VCSEL forecast and a 38% CAGR indicate the scale of the expected category expansion. The 2027–2028 solution window, 200G device target, and Micro VCSEL dimensions describe the work intended to enable that expansion. None of these items demonstrates current NPO orders, spot-market demand, production supply, lead times, allocation, or price. Those commercial facts require separate supplier evidence.