Hon Hai CPO Switching Unit Ships NVIDIA Products Early

Foxconn Technology Group has once again achieved a milestone in the field of AI computing infrastructure. Following the AI servers, its subsidiary Foxconn Interconnect Technology has already shipped its full-optical CPO switches to Nvidia in advance of schedule. This indicates that Foxconn's AI strategy is extending from hardware assembly to high-value core network equipment.

Market reports suggest that Foxconn's shipments of full-optical CPO switches are significantly ahead of schedule. Originally predicted to ship more than 10,000 units by 2026, the forecast has now been revised to over 50,000 units between 2026 and 2027. Insiders reveal that the capacity at their Vietnam factories is in such high demand that they are even shipping "display cabinets as products."

As Nvidia's sole contract manufacturer and design manufacturer for full-optical CPO, Foxconn directly benefits from the global expansion of AI computing power. For investors, this not only brings revenue growth but also represents a qualitative change in profitability. Traditional server contract manufacturing has a gross margin of only 5% to 8%, while the gross margin for CPO products can reach double digits.

Analysts forecast that by 2026, this business is expected to contribute more than 15% of Foxconn Interconnect Technology's revenue. It will become the second growth curve following AI servers. The addition of high-profit-margin businesses will bring a structural change to Foxconn's overall profitability and may enhance its market valuation.

CPO, or Co-Packaged Optics technology, is key to应对ing the expansion of AI clusters. It significantly improves transmission efficiency and reduces energy consumption by integrating photonic engines with switch chips. Foxconn Interconnect Technology has previously listed CPO as one of the four key technologies to support future AI computing power growth.

The year 2026 is seen as an important turning point in the development of data center optical communications. Foxconn's move aims to seize the opportunity of technological iteration. Despite high market sentiment, Foxconn remains non-committal on comments regarding single customers and products.