Is United Microelectronics' Rally Just the First Shot? NVIDIA Fully Adopts CPO, 8-Supply Chain Players Enter Golden Growth Era!

Imagine this: your home Wi-Fi is fast enough, but AI training in data centers is like hundreds of millions of vehicles simultaneously jamming onto a single-lane highway. Traditional copper interconnects are already overwhelmed, causing skyrocketing power consumption, increased latency, and severe heat dissipation issues.

Recognizing this early, tech giants like NVIDIA (NVDA-US) and Broadcom (AVGO-US) have already begun a full shift toward CPO (Co-Packaged Optics) and silicon photonics technology. This involves packaging optical engines directly beside switching chips—akin to building a 'fiber-optic highway' straight into the heart of the chip.

In the second half of 2026, this technological transition will move from the verification phase into actual mass production. TSMC's (2330-TW) COUPE platform has already been adopted by Broadcom and NVIDIA, and CPO switches such as Spectrum-X have begun shipping. Meanwhile, CSP (Cloud Service Provider) capital expenditures continue to be revised upward. Market forecasts suggest that by 2027, optical engine shipments could reach the millions to tens of millions range. Taiwan's supply chain—from upstream epitaxy and lasers to mid-to-downstream packaging and fiber array components—will benefit structurally. Analysts estimate that the critical ramp-up period will be from late 2026 to 2027, with supply chain profitability visibility rapidly improving.

Why is the second half of 2026 so highly anticipated?

First, technological bottlenecks have been overcome. While 800G remains mainstream, preparations for 1.6T and 3.2T are accelerating. CPO addresses the pain points of high power consumption and latency. New architectures like NVIDIA’s Vera Rubin platform have clearly integrated silicon photonics.

Second, real orders are now being placed. This is no longer just conceptual—data center upgrade demand is already reflected in supply chain orders. TSMC’s COUPE platform leads the way, and Broadcom’s Tomahawk series CPO switches are entering commercial deployment.

Third, the supply chain is maturing. Packaging, testing, and laser manufacturing processes are gradually falling into place. Mass production will accelerate in the second half of 2026, with even more significant volume increases expected in 2027.

For investors, what matters most in the second half of 2026 is not just the CPO concept, but the entire supply chain entering a rhythm of order intake, verification, and volume ramp-up. The next chapter of the AI stock market will shift from 'pure speculation' to 'real revenue and profit realization.' As advanced packaging and optical integration become irreversible trends, Taiwan-based firms with key technologies and patent moats will represent the most solid growth trajectory for years to come.

United Microelectronics (3081-TW) is the leader in indium phosphide (InP) epitaxy and a key light source supplier for silicon photonics. It turned profitable in 2025, with full-year EPS of NT$4.66, driven by a surge in silicon photonics product shipments. In 2026, demand for silicon photonics will remain strong, and the company has added a new U.S.-based CSP customer. Analysts project EPS could jump dramatically to nearly NT$20. Growth will be driven by high-end products like CW Lasers. The company’s competitive edge lies in InP materials and epitaxy technology, with its moat strengthened by capacity expansion (doubling MOCVD capacity) and long-term customer commitments—making it a core player in upstream CPO light sources.

Uni-opto (4991-TW) is one of the few domestic manufacturers with III-V compound semiconductor epitaxy capabilities, producing high-speed lasers, VCSELs, and optical communication components. As demand for AI-driven high-speed optical modules grows, advanced epitaxy processes create a high technical barrier, giving the company a strong competitive moat. Its profitability is expected to explode this year.

IET-KY (4971-TW) also specializes in indium phosphide epitaxy and is a major supplier of high-speed optical communication lasers. With limited global capacity for high-end epitaxy and rapidly increasing demand for high-speed lasers in the 1.6T era, the company stands to benefit significantly in the long term.

Po-Wei (3163-TW) has long specialized in passive optical components, with technological advantages in PLC splitters and fiber arrays, making it a key supplier of critical components for high-speed optical communications. As CPO penetration increases, the company is expected to continue benefiting.

Sunrise (3363-TW) is distinguished by its fiber optic connectivity and FAU (Fiber Array Unit) technology, essential components for silicon photonics packaging. High yield rates and precision assembly create a high barrier to entry, establishing a hard-to-replace competitive advantage.

Ligitek (3450-TW) has doubled its high-speed laser die packaging capacity compared to last year, with high-end products accounting for over 60% of its optoelectronic business, driving strong growth in annual earnings and EPS.

Accton (2345-TW) has become a key global supplier of AI switches, with 800G products ramping up quickly and actively developing 1.6T switches. As major cloud providers continue to expand AI data centers, demand for high-speed switches will remain strong. The company benefits from three competitive moats: scale, customer base, and R&D.

Walsin Technology (4979-TW) focuses on high-speed optical transceivers and active optical components, benefiting from AI data center upgrades. Shipments of high-speed products continue to rise. As global demand for optical modules grows rapidly, the company’s operations are gradually recovering, with improving growth momentum.