Why has Micro LED optical communication become a hot topic?

Recently, the A-share Micro LED concept has continued to surge, and the logic of "Micro LED CPO replacing copper cables" is widely recognized by capital.

At the same time, news from the industry is also pouring in: the global computing power giant NVIDIA is tilting its strategy in the field of optical interconnection; Microsoft Azure-related prototypes have completed testing and are the first to be deployed for commercial verification; domestic leading LED companies are also following suit, Sanan Optoelectronics, BOE Huacan Optoelectronics, Zhaochi Technology, Leyard, etc. have disclosed technological breakthroughs and industry progress.

On the one hand, there is the enthusiastic pursuit of the capital market, and on the other hand, the accelerated layout of giants and supply chains. Why has Micro LED, which has long been focusing on the high-end display field, suddenly crossed over into the optical communication track and become the "new favorite" in the AI era? This article will explain it from three levels: technology, demand, and industry impact.

Why is Micro LED optical communication considered a future technology?

The recent market enthusiasm began with Nvidia injecting US$2 billion into global optical communications giants Lumentum and Coherent respectively. Although Micro LED is not explicitly mentioned, both companies have in-depth layout in the field of Micro LED optical communication devices. There is also a signal behind it: Micro LED CPO will be the technical direction to meet the explosive growth of AI computing power.

Micro LED CPO is the fusion of Micro LED and CPO. Micro LED CPO can be compared with traditional silicon photonic CPO and traditional copper cable interconnection. The characteristics of the three are as shown in the figure below:

Micro LED CPO, traditional silicon photonic CPO and traditional copper cable interconnection

Micro LED The advantages of CPO are low power consumption, high density, and great potential for cost performance after scale, but it has not yet been commercialized; traditional silicon photonic CPO technology is mature and has long transmission distance, but the process is complex, high cost, and energy efficiency is average; traditional copper cable interconnection technology is mature, the initial cost is low, but power consumption is high, bandwidth is low, and the transmission distance is short.

From a formal point of view, based on the paper published by Microsoft Research SIGCOMM, Microsoft MOSAIC adopts "wide and slow" architecture optical link technology, replacing a few high-speed channels with hundreds of parallel low-speed optical channels, subverting the "narrow and fast" traditional link model and achieving long-distance, low-power consumption, and highly reliable transmission goals.

In short, Micro LED CPO has the following three major advantages:

1. With extremely low power consumption, energy efficiency is improved by nearly 20 times. It is only 5% of the traditional copper cable solution, significantly reducing data center energy consumption and cooling costs.

2. Ultra-high bandwidth can be achieved with a very small size. Micro LED chip size can be controlled below 50μm, supporting large-scale array parallel transmission, with bandwidth density exceeding 0.5Tbps/mm², solving the problem of tight cabinet space.

3. High reliability and long transmission distance. Adopting a "wide and slow" parallel architecture, it has strong anti-interference ability, the failure rate is close to that of copper cables, and the transmission distance can reach 50 meters, which is far better than the limit of 2 meters of copper cables, taking into account both reliability and scalability.

How much demand for Micro LED will optical communications bring?

For practitioners in the LED display industry, what they are most concerned about is how much actual chip demand this new track can bring and open up a new space for growth.

Taking Microsoft MOSAIC as an example, based on a 1.6Tbps link, 800 Micro LED channels are required. Including losses, each optical module consumes approximately 920 Micro LEDs.

Taking the high-speed interconnection scenario as an example, a single NVIDIA GB200 server needs to be equipped with 162 1.6T optical modules. If deployed in a 200-rack scale cluster, a total of 29.8 million Micro LEDs can be consumed, which is approximately a 135-inch P0.7 4K display.

From the perspective of industry development, with the advancement of the pilot project of Microsoft's MOSAIC solution and the increase in GB200 rack shipments in the second half of the year, Micro LED CPO shipments are expected to gradually increase this year.

What impact will it have on the LED industry?

In terms of product nature, although Micro LED for optical communications and Micro LED for display have the same origin, they focus on high-speed modulation capabilities, low power consumption, and wavelength stability. There is no need to pursue high brightness. The core service is data center optical transmission and is a high-end customized chip.

Currently, Micro LED CPO has not really left the laboratory. The core bottlenecks focus on technology adaptation, yield improvement, cost control and industry chain coordination. LED companies, as core participants, provide irreplaceable support for Micro LED CPO to move from "laboratory" to "industrialization".

On the one hand, LED companies have been deeply involved in R&D and manufacturing for many years and can directly export core technical capabilities and focus on the optimization of high-speed modulation technology. In addition, LED companies can provide the basis for large-scale mass production and increase the cost-effectiveness advantage of Micro LED CPO in the later stage.

But on the other hand, Micro LED CPO is still in its infancy. Micro LED CPO has huge investment in R&D, low chip yield, and high production line upgrade costs, making it difficult to reduce the cost of a single module. Even if leading companies optimize technology, they will not be able to achieve cost parity with traditional solutions in the short term. In addition, data center customers have extremely high requirements for the stability and reliability of optical interconnection solutions. Micro LED CPO still needs long-term verification.

As a new track, Micro LED CPO is expected to promote new growth in LED, but it also needs to face up to competition issues in the AI market, collaboration issues due to imperfect industrial chain supporting facilities, and cost issues caused by insufficient commercialization feasibility. Enterprises need a long-term layout, collaborative chain replenishment, differentiated layout, binding customer resources in advance, and improving commercialization feasibility in order to promote the steady development of the industry.