Fangzheng Securities: The NPO trend is accelerating, and attention is being paid to TIA/driver chips

The Zhitong Finance App learned that Fangzheng Securities released a research report saying that with its advantages such as ultra-low power consumption, ultra-low latency, high density integration, and high reliability, it is becoming an important technical direction for the next generation of high-speed optical interconnections, and major manufacturers such as Huawei and Ali are deploying one after another. The bank pointed out that linear direct drive technology has become an important path to reduce NPO power consumption, and TIA and driver chips are expected to benefit as core links; with the launch of the OPENNPO project and the accelerated deployment of CSP vendors such as Tencent Cloud, domestic TIA/driver chips have broad prospects for penetration.

Fangzheng Securities's main views are as follows:

Industry giants push NPO industry trends to accelerate implementation

With advantages such as ultra-low power consumption, ultra-low latency, high-density integration, and high reliability, near-package optics (NPO) is becoming an important layout direction for the next generation of high-speed optical interconnections for industry giants. In July 2026, Huawei and more than 20 industry chain partners, including China Mobile Research Institute, JD Cloud, Baidu, and China Electronics Standardization Research Institute, jointly launched the OPENNPO project and launched the first domestic NPO optical interconnect MSA to promote the establishment of an open and unified NPO standard system. In July 2026, Tencent Cloud executives said at the WAIC conference that the company would deploy localized computing power on a large scale, expected to deploy NPO supernodes in the fourth quarter of 2026, and called for the unification of NPO industry standards at home and abroad. TrendForce said that NPO has become a key layout direction for CSP vendors such as Tencent, Ali, Meta, Microsoft, and Amazon, and the CPO/NPO market is expected to exceed 39 billion US dollars by 2030.

Linear direct drive technology has become an important path to reduce NPO power consumption, and TIA and driver chips are expected to benefit as core links

A 3.2T NPO is equivalent to 8 400G optical modules, but the size has been drastically reduced, so balancing density, latency, and power consumption is the key to NPO design. Although the traditional DSP architecture has good compatibility, it cannot effectively solve the power consumption problem. With the advantages of low latency and low power consumption, the linear direct drive solution can help NPO achieve high-density link connections and is an important path. In traditional pluggable optical modules, TIA and drivers assume the most critical analog amplification role at both ends of the signal chain, and in linear direct-drive NPO layouts, they are required to undertake some of the signal compensation and linearization tasks originally performed by DSP. The 3.2T NPO solution released by Alibaba Cloud in 2026 is based on two 16-channel transceiver integrated silicon optical chips, with linear direct-drive driver/TIA chips. The PIC and EIC are inverted and integrated into the MSAP substrate. It has the potential for rapid mass production. The typical power consumption is about 20W, which is significantly lower than the DSP solution with the same bandwidth. In 2026, Tencent also released a 3.2t NPO solution using a linear architecture using TIA and Driver on the Goose Factory website. The development of TIA and drivers is expected to benefit from the accelerated implementation of linear direct drive NPO solutions, and the current supply of high-end TIA and driver chips is still dominated by foreign investors such as Marvell, Semtech, and MACOM, and the future prospects for domestic penetration are broad.

Risk Alerts

NPO technology development falls short of anticipated risk; CSP's CapEx investment falls short of anticipated risk; AI development falls short of anticipated risk.