Co-Packaged Optics Manufacturing Enters Volume Production

Co-packaged optics is moving into volume production. On their third-quarter 2026 earnings calls on October 29 and November 9, 2026, outsourced packaging and test provider ASE Technology Holding (ASX) and inspection and metrology equipment maker Onto Innovation (ONTO) both described CPO shifting from pilot lines toward production: ASE gave a revenue expectation for 2027, and Onto said silicon photonics was already contributing to its quarterly growth [1][2].

---

Why volume CPO lines need production-grade test and inspection

Co-packaged optics (CPO) places the optical engine, which converts electrical signals to light, inside the same package as a switch chip or AI accelerator, replacing the separate optical modules that plug into equipment front panels today. The core of the optical engine is a photonic integrated circuit (PIC), an optical circuit built on a silicon wafer. Until now these parts were made in small engineering lots and on pilot lines, so demand for inspection and yield tools stayed small.

At volume, a line has to confirm that every photonic chip is good before it is packaged, because one bad die can scrap an entire expensive package. New PIC and optical-engine lines therefore need wafer inspection, metrology, optical probe testing and burn-in equipment. Once packaging houses take volume orders and add capacity, those purchases flow to the same group of tool suppliers.

---

ASE guides to CPO revenue while Onto's photonics orders turn into sales

ASE expects more than $500 million of CPO revenue in 2027 and will book it within LEAP, its leading-edge advanced packaging business [1]. According to a media report, ASE subsidiary SPIL plans to expand its Taiwan CPO optical-engine capacity 15-fold by mid-2027 and to double it again by the end of 2028 [3].

The equipment side moved earlier. On its second-quarter call in August, Onto said it had received more than $50 million in silicon photonics orders, roughly two-thirds of them for delivery in 2027 [4]. On November 9, the company said its revenue from power semiconductor and silicon photonics markets doubled in the third quarter and that it expects significant growth to continue into the fourth quarter and through 2027. Management added that silicon photonics is coming from a very low base and was a significant contributor to quarter-over-quarter growth [2].

One disclosure comes from a packaging house buying capacity and the other from a vendor selling tools, and together they support the view that CPO lines are leaving the pilot stage. Onto does not report silicon photonics separately from power semiconductors, however, so the size of its photonics revenue cannot be measured on its own [2].

---

Outsourced CPO volume is concentrated, and one ecosystem sets the pace

For now, outsourced CPO volume sits mainly with ASE and SPIL, and equipment vendors are recognizing revenue ahead of CPO unit shipments. Amkor (AMKR), the other large outsourced packaging house, described CPO only as an "emerging" program on its second-quarter call and did not mention it at all on its third-quarter call [5][6].

Timing views also differ. Test equipment maker Teradyne calls CPO "preseason," with one initial customer and a 2026 test market of about $100 million [7]. Optical module contract manufacturer Fabrinet expects contributions only toward the end of its fiscal 2027 [8]. FormFactor (FORM) says CPO is still dominated by one ecosystem [9]. The scope and speed of the CPO ramp may therefore be narrower than ASE's comments suggest. Metrics to track include whether ASE's 2027 CPO revenue materializes, SPIL's capacity build, and whether Onto starts disclosing silicon photonics revenue separately.

---

Companies exposed to this shift

• FormFactor (FORM): The company makes wafer probe cards and test systems, and its Triton wafer-level optical probe tests CPO photonic chips before packaging. It started the year expecting $10 million to $20 million of Triton revenue and now expects upwards of $30 million in 2026 [9]; if CPO volume grows, this product line sits at the step that screens for good die before packaging.
• Aehr Test Systems (AEHR): Its FOX-XP systems burn in photonic integrated circuits at the wafer level. The company says additional production orders from multiple silicon photonics customers lifted fiscal first-quarter 2027 bookings to $46.7 million, up 300% year over year [10], though how those orders map to CPO volume still needs to be checked.
• Camtek (CAMT): The company sells 2D and 3D inspection equipment into photonics lines, and photonics is about 5% of an order book of roughly $600 million [11]. The share is still small, and whether it rises with CPO volume remains to be verified.

---

Sources

[1] Drillr · ASE Technology Holding (ASX) · 2026-10-29 · Q3 2026 earnings call

There are some other new projects that we are entering. For example, CPO. And we're expecting over half a billion of revenue coming from CPO as well for next year. That will be included in our LEAP revenue.

[2] Drillr · Onto Innovation (ONTO) · 2026-11-09 · Q3 2026 earnings call

[3] The Fast Mode · SPIL plans to expand Taiwan CPO optical-engine capacity · 2026-10-21 · News report · https://www.thefastmode.com/technology-solutions/51142-nvidia-expands-ai-infrastructure-capacity-with-global-supply-chain-partners

[4] Drillr · Onto Innovation (ONTO) · 2026-08-06 · Q2 2026 earnings call

[5] Drillr · Amkor (AMKR) · 2026-07-27 · Q2 2026 earnings call

[6] Drillr · Amkor (AMKR) · 2026-10-26 · Q3 2026 earnings call

[7] Drillr · Teradyne (TER) · 2026-10-28 · Q3 2026 earnings call

[8] Drillr · Fabrinet (FN) · 2026-11-02 · Fiscal Q1 2027 earnings call

[9] Drillr · FormFactor (FORM) · 2026-10-28 · Q3 2026 earnings call

[10] Drillr · Aehr Test Systems (AEHR) · 2026-11-02 · Fiscal Q1 2027 earnings call

[11] Drillr · Camtek (CAMT) · 2026-08-10 · Q2 2026 earnings call

---

This article highlights industry changes and companies that may be overlooked. It is not a stock recommendation.