Cadence Design Systems and Lightmatter announced a technical partnership on January 27 2026 to develop co‑packaged optics (CPO) solutions that combine Cadence’s silicon‑proven, high‑speed SerDes IP with Lightmatter’s Passage™ optical engine. The collaboration aims to deliver manufacturing‑ready CPO technology that can be integrated with advanced‑node CMOS processes and industry‑standard packaging workflows, targeting high‑performance AI infrastructure.
Cadence’s portfolio of SerDes IP includes the 112 Gbit/s Extended Long‑Reach (ELR) SerDes and the multi‑protocol Whistler PHY IP that supports PCIe 5.0 and 25 Gbit/s Ethernet. Lightmatter’s Passage 3D Silicon Photonics Engine offers reconfigurable optical circuit switching and high‑bandwidth, low‑latency optical interconnects that are designed to scale with advanced‑node CMOS processes. Together, the two companies plan to create a CPO platform that reduces electrical signal travel, cuts power consumption, and increases data‑rate density for AI accelerators and switch ASICs.
The partnership is a strategic milestone for Cadence, which has traditionally focused on electronic design automation (EDA) and verification tools. By entering the optical interconnect market, Cadence expands its IP portfolio beyond EDA into a high‑growth segment that is critical for next‑generation AI data centers. The collaboration could open a new revenue stream and reinforce Cadence’s “Intelligent System Design” vision, positioning the company to capture demand for higher bandwidth, lower latency, and power‑efficient interconnects.
Cadence’s Q3 2025 financial results provide context for the partnership. Revenue rose 10.1 % YoY to $1.339 billion, driven by strong demand in core EDA and AI‑infused design tools. GAAP operating margin expanded to 31.8 % from 28.8 % in Q3 2024, while non‑GAAP operating margin reached 47.6 % from 44.8 % the prior year. Cadence guided FY 2025 revenue to $5.262–5.292 billion and non‑GAAP EPS to $7.02–7.08, reflecting confidence in continued growth and margin resilience. The CPO partnership aligns with this growth trajectory and supports Cadence’s long‑term strategy to diversify beyond traditional EDA revenue.
The competitive landscape for CPO includes early entrants such as Broadcom, Cisco, and Ayar Labs. Cadence’s advantage lies in its proven SerDes IP, Universal Chiplet Interconnect Express (UCIe) technology, and deep expertise in high‑speed connectivity IP, which together provide a robust foundation for scalable, power‑efficient AI systems. The partnership positions Cadence to compete effectively in a market that is rapidly evolving toward optical interconnects for AI workloads.
Management emphasized the strategic significance of the collaboration. “As AI capacity continues to expand dramatically, scale‑up and scale‑out are transforming AI infrastructure,” said Boyd Phelps, SVP and GM of Cadence’s Silicon Solutions Group. “By integrating our high‑speed SerDes and UCIe IP into this new CPO platform, we’re helping customers build more scalable, power‑efficient AI systems.” Ritesh Jain, SVP of Engineering & Operations at Lightmatter, added, “Cadence’s connectivity IP is an ideal complement to our Passage platform. Together, we are paving the way for CPO deployment by solving the most complex optics‑electronics integration challenges, ensuring that the next generation of AI clusters can achieve the energy efficiency and bandwidth density required for frontier models.”
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