Can ChatGPT drive the scale of CPO?

1.Current Silicon Photonics VC CPO: Power Consumption

In 2016, Intel launched the 100G silicon optical module, which promoted the mass commercialization of silicon optical technology. The current silicon photonics technology solution is to connect two independent modules of the silicon photonics module and the CMOS chip on the PCB. Although it is easier to replace, it is disadvantageous in terms of power consumption, size and cost.

Co-Packaged Optics is to integrate the silicon optical module and the CMOS chip into the same package, and assemble them together on a slot to form a co-package of the chip and the module. First of all, the data connection quality (signal loss) between the silicon optical module and the CMOS chip is much improved compared to the PCB board, so it can reduce power consumption; on the other hand, after mass production, advanced packaging can also bring to cost improvement.

Finally, after using CPO, since they are all integrated in the same package, the integration level of the overall system is greatly improved and the size is reduced, so it can also improve the popularity of silicon photonics technology in data center application scenarios. Taking 32×100Gbps as an example, the current switch consumes 436W of power consumption, while the CPO switch greatly shortens the electrical connection through common packaging, and the power consumption is only 230W.

According to the forecast of CIR, a market research organization gathered by Orient Securities: by 2027, the market revenue of co-packaging optics will reach 5.4 billion US dollars.

In addition, the market research organization Lightcounting gave a positive forecast on the market size of CPO. CPO will start commercial use from 2024 to 2025, and scale up from 2026 to 2027. It is mainly used in the short-distance data communication of super large cloud service providers. In the scenario, by 2027, CPO ports will account for nearly 30% of 800G and 1.6T ports, and the current market is still dominated by 200G/400G ports.

2.The supply of chips continues to be tight, and attention should be paid to the increase in the market share of domestic silicon wafers

In 2023, the supply of 12-inch silicon wafers will continue to exceed demand. Globally, according to SUMCO statistics, the demand for 12-inch silicon wafers will increase from 8 million pieces per month in 2022 to 11.5 million pieces in 2026, with a CAGR of 9.4%. The cycle is more than 2 years, and the global silicon wafer production capacity will not be gradually increased until at least the second half of 2023. The domestic side is currently actively expanding the production capacity of 8-inch and 12-inch silicon wafers. It is expected that the 8-inch production capacity will increase by 900,000 pieces/month to 2.98 million pieces/month in 2023. The current production capacity of 12-inch silicon wafers is 900,000 pieces/month, and plans to expand production to 1.8 million pieces/month. It is expected to reach 2.7 million pieces/month after full production in 2024. Donghai Securities believes that in 2023, the global supply of 12-inch silicon wafers will be in short supply. It will provide strategic development space for domestic silicon wafer companies, and it is recommended to pay attention to the customer introduction and product certification of domestic silicon wafer companies.

3.China Telecom's comprehensive layout of large-scale model research and development, the era of 800G Optical Modules is coming

China Telecom has made a comprehensive layout of large-scale model research and development and achieved phased results, actively planning the development of "ChatGPT" related technologies; at the same time, the company stated that it will continue to increase the dividend payout ratio, which will reach 70% this year; cloud business revenue is expected to continue to double, and continue to promote digital economic development. As an important component of the cloud computing data center, the optical module is a very typical industry driven by the new product upgrade cycle.

In 2023, the 800G era is coming, and the first year of mass production will start. The industry is expected to usher in an upward turning point in performance in 2024. Compared with the year when the 100/200/400G new product cycle starts, the valuation is more seriously underestimated; at the same time benefiting from the ChatGPT calculation The demand for power has skyrocketed, the allocation value has become prominent, and the optical module sector is facing a reversal opportunity.

4.ChatGPT drives new increase in PCB demand

The main components involving PCB in the server include the motherboard, power supply backplane, network card, riser card, hard disk backplane, etc. PCB has higher requirements for board thickness, layer number, process, etc. in AI server applications. The characteristics of density and high transmission rate. The more PCB layers, the more flexible the design, which can have a better resistance to the circuit, and it is easier to realize high-speed transmission between chips, and the higher the unit value. The signal transmission rate of the PCIe3.0 interface is 8GT/s, and the corresponding server PCB board is 8-10 layers; the transmission rate of the PCIe4.0 interface is 16GT/s, and the number of server PCB layers used is 12-14 layers. The rate is increasing rapidly. For example, the Nvidia DGXA100 series server adopts the PCIe4.0 interface; the server platform will be upgraded to PCIe 5.0 in the next step, with a transmission rate of 32GT/s, and the number of PCB layers can reach 18 layers. As ChatGPT’s requirements for computing power increase, it is expected that server PCBs will increase in both volume and price. It is conservatively estimated that the value of PCBs per server can reach 4,000 RMB.

5.North American cloud computing vendors expect flat capital spending in 2023

North American cloud vendors have successively announced their financial reports for the fourth quarter of 2022. In 2022Q4, the four major cloud vendors achieved a total of 82.366 billion yuan in related business revenue, a year-on-year increase of 9.45%, and a total capital expenditure of 39.504 billion yuan, a year-on-year increase of 8.07%. Among them, Google said that it expects capital expenditures in 2023 to be basically the same as in 2022, but it will increase investment in technical infrastructure, including investment in AI and cloud services. Meta said it expects capital spending to be between $30 billion and $33 billion in 2023, down from a previous estimate of $34 billion to $37 billion, largely due to newer data center architectures being more cost-effective.

Other news

AI drives the rapid growth of global demand for computing power, and the scale of high-performance, high-computing servers/switches will increase. In terms of servers, according to IDC, the global high-performance server market for AI will increase by 51.4% year-on-year in 2022, and it is expected that the growth rate of domestic server market shipments will rebound to 6.41% in 2023. In terms of switches, IDC expects that the domestic Ethernet switch market will grow by 9.2% year-on-year in 2023. Among them, the upgrade of computing power will drive the accelerated deployment of 200/400G high-speed products. Increase.