Broadcom (AVGO) weighed in on the debate between co-packaged optics and copper-based interconnects for larger-scale processor racks and has firmly planted its weight behind copper—for now.
Tan said the company is “really very, very uniquely” positioned to help its customers and those that just use general-purpose GPUs (such as the ones made by Nvidia (NVDA)) when it comes to networking, via copper.
“If you are running—trying to create LLMs and running—creating your own AI data centers and designing it, architecting it, you truly want larger and larger domains or clusters for—and you really want to connect XPUs to XPUs directly where you can,” Tan said on Broadcom’s earnings call. “And the best way to do that is to use direct attach copper. That’s the lowest latency, lowest power, and lowest cost. So you want to keep doing that, especially in scale-up, as long as possible. In scaling out, we’re past that. We use optical. That’s fine. But I’m talking about scaling up in a rack, in a cluster domain. You really want to use direct-attach copper as long as you can.”
There has been significant optimism about co-packaged optics, which has benefited Lumentum (LITE) and Coherent (COHR) with significant moves in their respective share prices of late. However, Tan said that even though Broadcom is “the lead” in co-packaged optics, copper is still the best option for connecting larger racks.
“We can do it with copper, and we can push the envelope from 100G to 200G to even 400,” Tan added. “We have SerDes now running 400G that can drive distance on a rack to run copper. What all I’m trying to say is you don’t need to go run into some bright shiny objects called CPOs, even as we are the lead in CPOs. CPOs will come in its time, not this year, maybe not next year, but in its time.”
Credo Technologies (CRDO), which makes active electric cables using copper-based interconnects, rose more than 8% in premarket trading. Lumentum and Coherent fell 4% and 5%, respectively.
Nvidia invested $2B apiece into Lumentum and Coherent earlier this week, as the GPU giant continues to secure its supply chain.