NVIDIA Corp (NASDAQ: NVDA) has revealed that its Spectrum-X co-packaged optics (CPO) switch line, engineered for scale-out network architectures, has now transitioned into volume manufacturing.

In a client note issued Monday, GF Securities analyst Alicia Xia highlighted that Taiwan Semiconductor Manufacturing Co (NYSE: TSM) has significantly scaled up its deployment of CPO testing and inspection equipment to accommodate the robust production ramp, particularly expanding capacity for Insertion 2/3 processes. Additionally, key suppliers involved in fiber array units (FAU), shuffle boxes, and system assembly are demonstrating solid progress. The analyst maintained projections for Nvidia's scale-out CPO switch shipments of 15,000 units in fiscal 2026 and 100,000 units in fiscal 2027.

Meanwhile, Nvidia's scale-up CPO/near-package optics (NPO) solution, based on the NVL576 architecture, is anticipated to begin adoption in the second half of 2027. In parallel, Amazon.com Inc (NASDAQ: AMZN)'s Trainium 4 chip is expected to launch in three configurations, with two of them likely integrating NPO technology.

"One design is built on ALAB PCIe Gen7, while another leverages UALink switch silicon," Xia noted. "The 64-card system based on UALink is projected to become the dominant form factor, with the PCIe Gen7 variant potentially serving as an early-stage solution. We also expect Trainium 4 to incorporate Nvidia's NVLink Fusion, which may adopt an NPO design similar to that of the NVL576."

These developments are poised to benefit a range of component suppliers, including Lumentum Holdings Inc (NASDAQ: LITE), Coherent Corp (NYSE: COHR), Semtech Corp (NASDAQ: SMTC), Marvell Technology Inc (NASDAQ: MRVL), and Tower Semiconductor Ltd (NASDAQ: TSEM).