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SiPhIA conference reinforces optimism for CPO mass production, with TSMC COUPE and wafer-level testing as the key catalysts

Institution
UBS
Date
2026-04-02
Authors
Nicolas Gaudois, Madeleine Jenkins, Jimmy Yu, Kenji Yasui, David Vogt, Natalia Winkler, CFA, Timothy Arcuri, Ally Chen, Jerry Su, Randy Abrams, Ryan Sun, Sunny Lin
Company
COHERENT CORP
Ticker
US.COHR
Industry
Scientific & Technical Instruments; Semiconductors
Rating
Buy ratings on TSMC, ASE, USI, KYEC, Teradyne, Hon Precision, Chroma and BizLink
BullishLow confidenceThe SiPhIA conference showed improving readiness for mass production of CPO and silicon photonics, with the TSMC COUPE platform, wafer-level double-sided testing, and supply chain coordination seen as key drivers of CPO adoption.
AuthorsNicolas Gaudois, Madeleine Jenkins, Jimmy Yu, Kenji Yasui, David Vogt, Natalia Winkler, CFA, Timothy Arcuri, Ally Chen, Jerry Su, Randy Abrams, Ryan Sun, Sunny Lin
CoverageOther
Business segmentsSilicon photonics、Co-packaged optics (CPO)、Wafer-level testing、Optical engine、Fiber array unit (FAU)、External laser source (ELS)、Switch chips and SerDes IP
Research firm divisions/subsidiariesUBS（Other）

AI summary card

SiPhIA conference reinforces optimism for CPO mass production, with TSMC COUPE and wafer-level testing as the key catalysts

UBS believes readiness for CPO and silicon photonics mass production is improving, and TSMC, test equipment, OSAT, optical components, and related supply chain companies are likely to benefit.

The accompanying disclosure table shows that ASE Industrial, BizLink Holding, Chroma ATE, Hon.Precision, Inc., King Yuan Electronics, Taiwan Semiconductor Manufacturing, Teradyne Inc, and Universal Scientific Industrial are all rated Buy on a 12-month basis; no target prices are disclosed.
SemiconductorsSilicon photonicsCPOTSMC COUPEWafer-level testingAI data centersOptical engine
  • TSMC became more constructive on CPO mass production at the SiPhIA conference and showcased the COUPE platform, with post-stress-test insertion loss below 0.5 dB.
  • The increase in wafer-level test insertions is a key step in CPO commercialization, especially simultaneous double-sided testing of EIC and PIC in insertion 2.
  • TSMC is seen as the main driver of CPO mass-production progress and works closely with key CPO developers such as Nvidia, Ayar Labs, and Lightmatter.
  • The Buy-rated names listed in the report include TSMC, ASE, USI, KYEC, Teradyne, Hon Precision, Chroma, and BizLink.

Report interpretation

Overview

This report summarizes the key takeaways from the Silicon Photonics Production Revolution Conference held in Taiwan on 2026-03-31. Participants included TSMC, ITRI, Coherent, eLaser, Sumitomo Electric, and Advantest. The core theme was CPO and silicon photonics moving from technical validation toward mass-production readiness. UBS believes the industry is more optimistic about the manufacturability of CPO, and the TSMC COUPE platform, wafer-level test solutions, and supply chain coordination are the main points to watch.

Core views

The core views are: first, readiness for CPO mass production is improving, and TSMC is more confident about ramping production; second, wafer-level testing is evolving from separate EIC/PIC tests to synchronous EIC on PIC testing, which is a key prerequisite for xPU-scale CPO in 2029; third, the TSMC COUPE adopts pragmatic technical approaches such as MRM, germanium photodetectors, and grating coupling, which should help standardize the industry; fourth, supply chain opportunities span epitaxial wafers, fibers/cables, FAUs, packaging and testing, ELS lasers, optical engines, switching chips, TIAs, wafer fabrication, and equipment vendors.

Analysis framework

The report is based on the SiPhIA conference minutes, combined with presentations from TSMC, ITRI, Coherent, Advantest, and others, as well as charts showing the CPO value chain, manufacturing and packaging schematics, the test insertion process, and the company disclosure table, to assess CPO technology maturity, key bottlenecks, and the supply chain segments that stand to benefit.

Methodology notes

  • Industrial chain analysisCPO Value Chain

    Break down CPO suppliers by value-chain segment

    The report divides the CPO supply chain into epitaxial wafers, fibers/cables, FAUs, packaging and testing, ELS lasers, optical engines, switching ASICs/SerDes IP, TIAs, chip fabrication, and equipment vendors to identify representative suppliers in each segment.

  • Technology maturity analysisWafer-level Test Insertion

    Wafer-level test insertion process

    The report places particular emphasis on insertion 2, namely simultaneous double-sided testing of EIC and PIC at the wafer level. This step is seen as key to improving optical-engine quality and reliability and supporting large-scale CPO adoption.

  • Rating frameworkUBS 12-Month Rating

    12-month rating definition

    UBS defines Buy as an expected stock return over the next 12 months that is more than 6 percentage points above the market return assumption; the companies in the disclosure table are all listed as Buy.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

  • COHERENT CORP / US.COHR
    Conference presenter and CPO supply chain participant; listed as a notable supplier in the epitaxial wafer and ELS laser source segments.
    Strengths
    Has exposure to optical communications and laser-related supply chains, and may benefit from rising demand for epitaxial wafers and laser sources driven by CPO.
    Weaknesses
    The report does not provide a rating, target price, or specific financial forecast for COHERENT CORP.
    Comparison
    Along with Lumentum, Sumitomo, Furukawa, Broadcom, LandMark, and GCS, it is in the ELS laser-source supplier list.
    Risks
    The pace of CPO mass production, customer adoption, price competition, and changes in technology routes may affect the degree of benefit.
  • TSMC
    Core platform provider driving CPO mass-production progress; COUPE is viewed as the industry's main driver.
    Strengths
    Works with key developers such as Nvidia, Ayar Labs, and Lightmatter, and uses pragmatic solutions such as MRM, germanium photodetectors, and grating coupling in COUPE.
    Weaknesses
    CPO still needs validation through mass-production reliability, test insertion, and supply chain coordination.
    Comparison
    Alongside GlobalFoundries, Intel, Tower, and UMC in the chip-manufacturing segment, though the report places greater emphasis on TSMC's leading role.
    Risks
    If the COUPE platform ramps more slowly than expected, the pace of industry adoption could slow.
  • ASE / SPIL / USI
    Packaging, testing, OE on substrate packaging, and FAU coupling-related supply chain.
    Strengths
    Frequently mentioned in optical-engine testing, ASIC + OE alignment final test, and packaging/coupling services.
    Weaknesses
    The business is affected by CPO customers' mass-production progress and packaging yields.
    Comparison
    Shares the packaging and testing segment with Amkor, ShunSin, Fabrinet, Foxconn, and FIT.
    Risks
    Advanced packaging and optical coupling yields, equipment supply, and customer concentration are major risks.
  • Teradyne / Chroma / Advantest
    Test equipment and test solution suppliers.
    Strengths
    Teradyne and Chroma are listed in EIC, OE, and final-test solutions; Advantest is listed as a PIC wafer-level tester.
    Weaknesses
    Demand depends on whether the CPO test-insertion solution becomes the mass-production standard.
    Comparison
    Advantest is more focused on PIC testers, while Teradyne and Chroma appear in multiple test steps.
    Risks
    Changes in test-process standards, equipment qualification cycles, and fluctuations in customer capex may affect orders.
  • BizLink
    Fiber/cable supply chain and a UBS Buy-rated name.
    Strengths
    As a notable supplier in fibers/cables, it benefits from demand for high-speed data-center interconnects.
    Weaknesses
    The report does not provide a separate earnings model or target price for BizLink.
    Comparison
    Shares the fiber/cable segment with Corning.
    Risks
    Changes in cable specifications, price competition, and fluctuations in data-center demand may affect performance.

Key data

  • Conference date and location2026-03-31, TaiwanSiPhIA hosted the Silicon Photonics Production Revolution Conference.
  • TSMC COUPE insertion loss<0.5 dBTSMC showcased the low insertion-loss result of the COUPE platform after stress testing.
  • CPO scale-up timing2029The report views insertion 2 as especially critical for xPU-scale CPO in 2029.
  • UBS Buy-rated companiesTSMC, ASE, USI, KYEC, Teradyne, Hon Precision, Chroma, BizLinkThese companies are listed as Buy-rated in the report body.
  • Disclosure table price date2026-04-01 or 2026-03-31The disclosure table shows a price date of 2026-04-01 for Taiwan/China-related companies and 2026-03-31 for Teradyne.

Impact & implications

If the CPO and silicon photonics mass-production path continues to advance, bandwidth and power bottlenecks in AI data centers are expected to ease, and advanced semiconductor packaging, test equipment, optical components, wafer fabrication, and high-end cable suppliers will gain greater strategic value. From an investment perspective, the market may further focus on companies with mass-production platforms, testing capabilities, and key component positioning.

Risks

  • Technology stocks have volatile operating models, low predictability, and difficult valuation.
  • CPO and silicon photonics are still in the mass-production preparation stage, and the actual adoption pace may be slower than expected.
  • If the insertion-2 double-sided wafer-level test and optical-engine quality and reliability cannot meet scale requirements, CPO adoption will be affected.
  • Different assumptions may lead to material differences in valuation and investment conclusions.
  • The value of investments may decline, and historical performance does not represent future results.
  • Foreign exchange, interest rates, market conditions, and regulatory/sanctions changes may affect the performance of the relevant securities.

What to watch

  • Follow-on mass-production progress of the TSMC COUPE platform and customer adoption.
  • Whether the EIC and PIC double-sided wafer-level test solution matures and becomes part of the mass-production process.
  • Progress in CPO collaboration between Nvidia, Ayar Labs, Lightmatter, and TSMC.
  • The adoption pace of DWDM light sources in future higher-bandwidth data-center scenarios.
  • Order signals from the testing and packaging supply chain, including ASE, USI, KYEC, Teradyne, Chroma, Hon Precision, and Advantest.
  • Capacity and yield changes among FAU, ELS laser, optical-engine, and high-end cable suppliers in the CPO supply chain.
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