Competing Paths in Data Center Optics: XPO Could Beat CPO to Mass Production in 2027

DIGITIMES notes that Arista Networks unveiled XPO at The Optical Fiber Communication Conference and Exhibition 2026 (OFC 2026). Unlike CPO, which is associated with more disruptive innovation, XPO takes an engineering-led approach to improving pluggable optical modules while preserving the advantages of the existing optical module ecosystem. It combines high bandwidth density, space savings, easier maintenance, and a lower barrier to technology migration. That said, it does not eliminate the physical limits of electrical signal transmission. CPO remains the long-term end state for data centers, but in the near term, XPO has already received public support from Microsoft, and multiple suppliers expect to reach mass production in 2027. In other words, XPO could win share in the data center market first and potentially push out the timing of CPO commercialization.

At OFC 2026, views on CPO maturity and commercialization timing diverged, highlighting differences in strategy and commercial incentives. Some companies continue to invest in CPO R&D, including NVIDIA. Others are balancing performance, cost, thermal management and ecosystem considerations, and are instead prioritizing Near-Packaged Optics (NPO), including Tencent and Alibaba Cloud. Arista Networks introduced XPO to extend the advantages of existing pluggable optics. As a result, during the gap before CPO matures, vendors will compete for data center opportunities using different technologies.