⚠ Co-Packaged Optics Removes the ModuleModerate threat

The structural threat to Marvell's best business is a packaging change. Today, optical modules plug into a switch and each contains a DSP — Marvell's product. Co-packaged optics moves the optical engine onto the same substrate as the switch silicon, shortening the electrical path so dramatically that much of the signal processing becomes unnecessary.

Nvidia, Broadcom and TSMC are all pushing versions of this, and the motivation is power: at the densities AI racks now run, the energy spent moving data between the switch and a pluggable module is a material share of the total. If co-packaged optics becomes the default at the highest speeds, a meaningful part of the addressable market for standalone DSPs disappears into someone else's package.

The counter-arguments are serviceability and pace. Pluggable modules can be replaced when they fail; a co-packaged optical engine takes the switch with it, which operators dislike. And transitions of this kind have been predicted repeatedly and arrived slowly. Marvell also participates in co-packaged approaches itself. Watch the mix of co-packaged versus pluggable in new high-speed deployments — that ratio, more than any competitor's product, decides how large this franchise stays — a segment worth over $6 billion a year to Marvell¹.