CITIC Securities: Optimistic about the Micro LED CPO industry trend; upstream chip segment is expected to benefit deeply

CITIC Securities Research Report: As AI computing power infrastructure continues to grow in scale and complexity, and as the industry chain matures, Micro LED CPO is expected to become an important solution for medium-distance optical interconnection due to its advantages in power consumption, speed, and stability. Currently, the industry is still in the early preparation and R&D stage, with key bottlenecks in light-emitting chip performance and optical system integration. It is anticipated that the industry will gradually move into practical application after 2027. Key investment opportunities include companies with leading Micro LED chip processing capabilities and strong vertical industry integration.

Industry Changes: Rapid Increase in Power Consumption Reduction Demand, Industry Focuses on Micro LED CPO Solution Pathways.

Since 2026, energy supply and consumption optimization have become important topics in computing infrastructure development. According to TrendForce, with the rise of generative AI, data centers’ demand for high-speed transmission continues to grow. Micro LED CPO solutions have lower unit transmission energy consumption, potentially reducing overall energy use to just 5% of copper cable solutions, making energy savings a key advantage for future replacement options.

Industry Trend: Micro LED CPO Could Be the Future Solution for Medium-Distance Transmission.

Based on CPO co-packaging technology, Micro LED CPO is the next-generation solution for silicon photonic CPO. It replaces the light source with self-emitting Micro LED chips, which can be modulated directly by current to achieve higher interconnection speeds (large-scale array deployment), greater integration, improved stability (durability and redundancy), and significantly lower power consumption (over 50% reduction compared to silicon photonic CPO). This aligns well with the future needs of AI supercomputing clusters for medium-distance interconnection and is expected to accelerate into mass deployment as the industry chain matures.

Industry Progress: CITIC Securities predicts that Micro LED CPO is likely to enter practical application stages after 2027.

Compared to silicon photonic CPO, which is gradually reaching mass production maturity, Micro LED CPO is still in early-stage development. The main bottlenecks include Micro LED chip performance (switching frequency, lifespan, latency), optical coupling and precision, and substrate material upgrades. Upstream and downstream collaboration is needed to advance the technology. Some leading domestic companies have already begun joint R&D and sample testing with downstream clients. CITIC Securities believes that Micro LED CPO solutions are expected to gradually enter practical deployment after 2027.