Ultra-short Reach Optical Interconnect: Backbone of Low-Latency Systems

Introduction

As digital services scale and workloads such as real-time trading, cloud gaming, AR/VR, and large-scale AI inference demand ever-lower response times, the physical link between compute elements becomes a limiting factor. Ultra-short reach (USR) optical interconnects are emerging as a pivotal technology to drive sub-microsecond and deterministic latency between chips, within racks, and across adjacent racks. Far more than “just fiber,” modern USR solutions blend photonics, packaging, and system-level design to deliver high bandwidth density, low jitter, and energy efficiency – all while meeting the reliability and manufacturability requirements of hyperscalers and telecom operators.

Definition

An Ultra-short Reach Optical Interconnect (USROI) is a high-speed optical communication link designed for very short distances – typically from a few centimeters to a few meters – used to connect components within or between electronic systems such as chips, packages, boards, or racks. It replaces traditional electrical interconnects to overcome bandwidth, power, and signal integrity limitations, enabling higher data rates, lower latency, and improved energy efficiency in data centers, high-performance computing, and advanced integrated systems.

What “ultra-short reach” means and why it matters

USR typically refers to optical links covering distances from a few millimeters to a few meters — distances. Historically were dominated by electrical interconnects (backplanes, copper cables, PCB traces). At these scales, optical interconnects must be optimized for minimal latency, low power per bit, and extremely high lane density. The advantage of moving to optics is not just raw bandwidth: optics reduce signal attenuation and cross-talk. Avoid the heavy copper bundles that consume rack space and power. And enable co-packaging strategies where optics sit very close to the ASIC or switch silicon to minimize electrical trace lengths.

Reducing latency at the physical layer yields outsized system benefits. Even a few nanoseconds saved per hop cascades into measurable improvements in distributed applications – less queuing, faster consensus. In distributed databases, and tighter synchronization for high-frequency trading engines. For AI workloads, lower interconnect latency between accelerator tiles improves overall throughput for models that require frequent weight/activation exchange.

Key technologies powering USR optical links

Several complementary technologies enable USR interconnects:

• Silicon photonics: Integrates optical components (modulators, waveguides, photodetectors) onto silicon wafers using processes compatible with CMOS fabs. Silicon photonics enables very compact, high-volume, and cost-effective transceivers with precise performance control and excellent thermal characteristics.
• Co-packaged optics (CPO): Instead of placing optics in pluggable modules at the end of a board, CPO places optical engines right next to the switch or ASIC. This reduces the length of high-speed electrical SERDES traces, lowering latency, power, and signal integrity challenges.
• VCSELs and multimode fiber for very short links: Vertical-cavity surface-emitting lasers (VCSELs) paired with multimode fiber remain common for cost-sensitive, short-reach applications (up to a few meters). They offer simplified alignment and connector ecosystems.
• Wavelength division and modulation advances: For higher aggregate bandwidth in the same fiber footprint, wavelength division multiplexing (WDM) and advanced modulation (PAM4, coherent short-reach variants) are used. For USR where distance penalties are small, simplified coherent schemes or multi-wavelength sources can increase density without complex DSP overhead.
• Advanced packaging and alignment: Nanometer-scale alignment between optical components and fibers is critical. Precision packaging and automated assembly techniques reduce insertion loss and improve yield for dense USR solutions.

Where USR is being deployed

USR optical interconnects fit naturally in several places:

• Top-of-rack and intra-rack switch fabrics: High-capacity, low-latency links between leaf and spine switches or directly between servers within a rack.
• Coherent interconnects between accelerator cards: GPU/TPU clusters and other accelerator arrays can use USR links to reduce latency between closely colocated boards or mezzanine modules.
• On-board and multi-chip modules: As chiplets and multi-die packages proliferate, optical bridges within a single package or across adjacent packages provide a path to scale bandwidth without exploding power or thermal budgets.
• Edge and telecom micro-data centers: Small form-factor facilities benefit from the power and space savings of optical USR links versus copper cabling.

Benefits beyond latency

Although latency is often the headline metric, USR optics also deliver:

• Higher bandwidth density: Optical lanes can scale with wavelength and modulation without dramatically increasing connector count or trace complexity.
• Lower power per bit at scale: Especially with co-packaging, optics reduce the need for long, high-power SERDES channels and repeated retiming, which consumes significant energy.
• Reduced electromagnetic interference: Optical signals are immune to EMI, simplifying board design and improving reliability in dense racks.
• Thermal and space advantages: Thinner, lighter fiber assemblies reduce airflow blockage and mechanical strain compared to thick copper bundles.

Challenges and engineering tradeoffs

USR optics are not a silver bullet; they require careful engineering and ecosystem maturity:

• Cost and volume economics: For ultra-short distances, the economics of optics vs copper depend on volumes, integration, and packaging costs. Silicon photonics and CPO are reducing costs, but initial investments are non-trivial.
• Thermal management: Placing optical engines near hot ASICs demands thermal design that keeps lasers and modulators within their operating envelope.
• Manufacturing precision: Alignment tolerances for many optical interfaces are tight. Automated assembly and testing infrastructure are needed for high yields.
• Standards and interoperability: The industry is still evolving connector and module standards for co-packaged and board-level optics, so interoperability across vendors can be limited today.

What the near future looks like

Over the next few years we’ll see several converging trends make USR optical interconnects mainstream:

• Wider adoption of co-packaged optics as hyperscalers and network vendors optimize for power and density. Expect more switch ASICs designed with optical interfaces in mind.
• Tighter silicon-photonics integration giving lower cost per lane and increased functionality (e.g., on-chip lasers, integrated WDM).
• Optical chiplets and standard interfaces that let system designers mix and match photonic and electronic dies in modular ways, accelerating innovation.
• Software and system co-design where application frameworks exploit low-latency fabrics to restructure communication patterns for better performance (e.g., finer-grained RPCs, decentralized model parallelism).

Growth Rate of Ultra-short Reach Optical Interconnect Market

According to Data Bridge Market Research, the ultra-short reach optical interconnect market was estimated to be worth USD 2.46 billion in 2025 and is projected to grow at a compound annual growth rate (CAGR) of 20.31% to reach USD 10.82 billion by 2033.

Learn More: https://www.databridgemarketresearch.com/reports/global-ultra-short-reach-optical-interconnect-market

Conclusion

Ultra-short reach optical interconnects are transforming how we think about the last millimeter. And the first meter of connectivity inside data centers and high-performance systems. By marrying silicon photonics, precision packaging, and co-packaged architectures, USR links deliver the low latency, high bandwidth density. And energy efficiency needed for next-generation applications. For architects building systems where every microsecond and watt matters, USR optical interconnects are no longer a niche. They are becoming the backbone of low-latency, scale-out computing.