Near-packaged optics could remove one of the most serious constraints on the growth of AI computing. The hardware is advancing. The standards needed to turn that progress into a scalable, multi-vendor market are also taking shape.

Moving optics closer to the processor shortens electrical connections, cuts signal loss and reduces power consumption. Common interfaces can extend those gains across the supply chain. Optical-engine makers, connector companies, semiconductor vendors and systems suppliers can develop against shared specifications, qualify products more efficiently and move toward volume production faster.

Interoperability should give customers more choice and greater confidence that components from different suppliers will work as expected. Vendors still have ample room to compete on power, density, thermal performance, reliability and cost.

Standards are not a secondary administrative exercise. They are part of the route to adoption. The technology may produce the performance breakthrough, but common rules can help the industry turn it into repeatable infrastructure.

As AI clusters expand, the network connecting thousands and eventually hundreds of thousands of processors increasingly determines the performance of the entire system. Copper cannot continue carrying data across the required distances at the necessary speeds without consuming impractical amounts of power and generating infeasible levels of heat. Traditional pluggable optics are also approaching physical and thermal limits.

NPO addresses this by moving the optical engine much closer to the switching silicon. It retains more of the serviceability of a modular design than fully co-packaged optics while reducing the length and power cost of the electrical connection.

The architecture is compelling. The next step is to build the ecosystem around it.

Interoperability expands the opportunity

NPO is developing along several technical paths, supported by different vendors, components and interface designs. That experimentation is useful during the early stages of a technology because it gives the industry several ways to test performance, manufacturability and cost.

As deployments grow, common interfaces can connect that innovation. Components designed to shared specifications can be used across more systems. Equipment manufacturers can streamline qualification. Suppliers can address a larger market, and customers can build with greater flexibility.

Done properly, this produces faster optics and a stronger market around them.

NPO is attractive for more than its performance. Compared with more tightly integrated co-packaged designs, it potentially offers a lower manufacturing threshold, a shorter path to volume production and simpler operations and maintenance. It can also support a broad supply chain of optical-component, connector, semiconductor and systems vendors.

Interoperability helps convert those technical advantages into commercial ones. It gives upstream and downstream companies a common foundation on which to invest, differentiate and scale.

Standards are catching up with the hardware

Standards organizations including the Optical Internetworking Forum and the International Photonics & Electronics Committee are working to establish common NPO specifications.

Huawei helped initiate the 12.8 Tb/s NPO Module project within OIF. The proposal has been officially approved as an OIF project and is supported by more than 40 companies from North America, Japan and China. Participants include systems vendors, optical component manufacturers and other companies across the supply chain.

That breadth is important. No single company, or even one part of the industry, can create an effective NPO ecosystem on its own. Switch manufacturers need to work with optical-engine suppliers. Connector companies must understand the mechanical and thermal requirements. Semiconductor vendors must support common electrical interfaces. Operators and hyperscalers must define how the systems will be deployed and maintained.

The participation of more than 40 companies suggests that the industry understands the opportunity. Agreement will take time, as it always does, but the work has moved beyond a discussion about whether common specifications are needed. The task now is to define them.

The 7.2T milestone

Huawei’s demonstrationof what it describes as the industry’s first 7.2T NPO optical engine at CIOE 2026 shows how quickly the hardware is advancing.

The engine uses 36 lanes operating at 200 Gbit/s and employs a linear direct-drive architecture without an optical digital signal processor. Huawei says the design substantially reduces power consumption and latency. The company also demonstrated dynamic transmission and optical eye diagrams during the event. 

The achievement is significant because it moves NPO beyond diagrams and technical discussions into functioning hardware. It also gives the standards process something concrete to build around.

Huawei’s 7.2T engine and the separate 12.8 Tb/s OIF project are related parts of the same industry transition, though they are not the same specification. One demonstrates what a vendor can build today. The other is intended to help establish the common framework through which a multi-vendor market can develop tomorrow.

The product and the standards effort are not diverging paths but two complementary steps in the same direction. One proves the value of the architecture. The other gives more companies a route into the market.

From technical cooperation to a real market

Standards work is rarely glamorous. Meetings take place over months or years. Definitions are debated. Interfaces are revised. Companies cooperate in the conference room while competing everywhere else.

Yet this is how a technology becomes a market.

Ethernet succeeded because it became larger than any one manufacturer. Pluggable optics created enormous value because customers could purchase modules from competing suppliers using commonly understood interfaces. NPO is beginning the same transition from engineering achievement to repeatable, interoperable infrastructure.

That does not mean every NPO product must be identical. Vendors should continue competing on power consumption, density, thermal performance, reliability and cost. Standards should define the points at which those different products connect, not prevent companies from improving what happens inside them.

The industry is now approaching that boundary. NPO has demonstrated that optics can move closer to the processor without surrendering every advantage of a modular system. The standards work under way can make that modularity useful across suppliers.

The hardware has begun to arrive. With interoperability taking shape alongside it, NPO has a credible route from technical breakthrough to a scalable global market.