As Taiwan’s semiconductor, high-tech, artificial intelligence, and export-oriented sectors continue to grow, renewable energy has evolved from an ESG option into an increasingly important consideration for supply-chain competitiveness, decarbonization commitments, and long-term business planning.Surplus Renewable Energy Does Not Mean “Too Much Renewable Energy”One distinction is essential when discussing Surplus Renewable Energy (Surplus RE): its existence does not mean that Taiwan has too much renewable energy, nor does it indicate system-wide market oversupply.Recent RE100 observations continue to identify high costs and limited supply as key barriers to corporate renewable energy procurement, indicating that corporate demand remains clear while both supply and procurement pathways still have room to expand. Data presented by Taiwan’s Executive Yuan Office of Energy and Carbon Reduction at the September 4 Energy Collaborative Forum likewise showed that renewable electricity generation increased from 4.8% of Taiwan’s power mix in 2016 to approximately 13.1% in 2025, underscoring the growing role of renewables in the electricity system.Two distinct phenomena are at work: Taiwan’s overall market still needs more renewable energy, while individual companies may experience unmatched electricity as long-term procurement expands. The first concerns whether Taiwan’s renewable energy supply is sufficient to meet corporate demand. The second arises when contracted generation profiles and procurement volumes do not align with a company’s electricity load within the applicable time periods.In this article, Surplus RE refers to renewable electricity that has already been procured but cannot be wheeled as originally intended because generation and consumption do not align within the applicable time parameters. Its occurrence and scale vary according to corporate load profiles, procurement volumes, energy mix, and project commercial-operation schedules. It does not mean that all companies currently face a Surplus RE issue. Rather, it reflects a market-matching and institutional-design challenge that becomes increasingly relevant as corporate renewable energy procurement expands—not an oversupply of renewable energy across Taiwan.Taiwan has also recently made concrete institutional progress in corporate renewable energy matching and Surplus RE treatment, including greater flexibility in wheeling allocation and continued policy work on the treatment of unmatched electricity and its associated environmental attributes. These developments are more than technical refinements: they increasingly respond to practical considerations in long-term corporate procurement, project investment and financing, and the continued development of Taiwan’s renewable energy market.Rigorous Matching and Certificate Rules Are an Important Foundation of Taiwan’s Renewable Energy MarketTaiwan applies a relatively rigorous framework to corporate renewable energy wheeling and recognition. Under the current arrangement, generation and consumption are matched primarily using 15-minute metering data. Once renewable electricity is successfully wheeled, Taiwan Renewable Energy Certificates (T-RECs) are issued based on the actual wheeled volume. This closely links certificate issuance to electricity delivery, strengthening the traceability of environmental attributes, the connection between generation and consumption, and the credibility of corporate renewable energy claims.This differs from some international markets, where certificates are generally issued against eligible renewable electricity generation and may subsequently be traded separately from the physical electricity. In the U.S., Renewable Energy Certificates (RECs) are created when renewable electricity is generated and delivered to the grid, while in the U.K., one Renewable Energy Guarantee of Origin (REGO) is issued for each 1 MWh of eligible generation. Taiwan, by comparison, more directly links certificate eligibility to actual wheeling outcomes. Time matching therefore affects both whether electricity can be wheeled as intended and whether the corresponding environmental attributes can be obtained and recognized.Where contracted renewable electricity cannot be matched as intended because of differences between generation and load, the unmatched volume does not, under the existing treatment, receive the corresponding certificates in the same manner as successfully wheeled electricity. The matching and certificate framework itself does not cause Surplus RE; rather, it turns underlying timing differences between generation and consumption into practical market issues involving certificate access, cost allocation, and commercial arrangements.Recent RE100 data provide another useful perspective. While the share of recognized renewable electricity among RE100 members in Taiwan still has room to grow, the gap between reported and ultimately recognized renewable electricity remains relatively limited. This suggests that a substantial share of reported corporate renewable energy procurement meets the applicable recognition requirements.The next stage for Taiwan is therefore not to lower existing standards for recognition or environmental integrity, but to increase flexibility in how companies allocate and use renewable energy while preserving credibility and traceability — allowing market efficiency and environmental integrity to advance together.The Nature of Renewable Electricity Makes Perfect Matching DifficultSurplus RE is closely related to both renewable electricity generation characteristics and corporate consumption patterns. Solar has a distinct daytime generation profile, wind output varies with wind conditions, and hydropower has its own supply characteristics. At the same time, different companies, facilities, and manufacturing processes have different electricity-load profiles.Companies can combine wind, solar, hydropower, and projects across different locations to improve the match between renewable electricity supply and their own load. Even so, generation and consumption profiles are unlikely to align perfectly at all times. Where contracted renewable electricity exceeds the company’s matchable load during a particular period, part of that electricity may be unable to complete the originally intended wheeling arrangement and become Surplus RE.The actual scale of Surplus RE depends on the volume of renewable energy procurement relative to the company’s load, its energy mix, project generation profiles, and project commercial-operation schedules. Where current procurement volumes can still be fully absorbed by the company’s own load, Surplus RE may remain limited. As long-term procurement volumes increase or medium- and large-scale renewable energy projects progressively reach commercial operation, time-matching issues may become more material.Surplus RE is therefore not a fixed percentage faced by all companies at the same time. It is a market-design issue that becomes increasingly relevant as corporate procurement and new renewable energy supply expand.When Take-or-Pay Meets Time MatchingFor corporate buyers, Surplus RE is more than a technical settlement issue. It is closely tied to the commercial structure of corporate power purchase agreements and the financing of renewable energy projects. Medium- and large-scale CPPAs are typically long-term contracts and may include take-or-pay provisions. These commitments improve revenue predictability for developers and are an important factor in financial institutions’ assessment of project cash flows and bankability.Under a take-or-pay structure, however, a company may still be contractually required to pay even if part of the renewable electricity cannot be wheeled as intended because of time-matching constraints. Under the original framework, the unmatched portion was also unable to receive the same certificate and environmental-attribute recognition as successfully wheeled electricity. As procurement volumes increase, corporate buyers therefore need to consider not only how much renewable energy they contract, but also how much electricity can actually be wheeled and utilized, and how any unmatched portion will be treated.To avoid conflating statutory renewable energy obligations with voluntary corporate procurement, the following simplified scenario illustrates the potential commercial scale of unmatched electricity under a long-term CPPA. The assumptions are illustrative only and do not represent average procurement volumes, an average Surplus RE ratio, or a forecast for the Taiwan market.Assume that a company enters into a CPPA for 50 GWh per year to support its renewable energy and supply-chain objectives. At an illustrative energy price of NT$6 per kWh, the annual notional purchase value would be approximately NT$300 million. If, after load management, portfolio diversification, and cross-facility allocation, 20% remains unmatched, approximately 10 GWh per year would fail to complete the intended wheeling arrangement, corresponding to a notional purchase value of approximately NT$60 million per year.This article uses 25 years as an illustrative contract term, reflecting the midpoint of approximately 20- to 30-year CPPA terms already seen in Taiwan’s large-scale offshore wind market. This does not imply that all CPPAs use the same tenor. Assuming price, generation volume, and the unmatched share remain constant, and excluding discounting, price adjustments, and other contractual terms, the cumulative notional value associated with the unmatched portion would be approximately NT$1.5 billion over 25 years.Table: Illustrative Long-Term Corporate CPPA Scenario:ItemAssumption / FormulaResultAnnual CPPA procurement volumeIllustrative assumption50 GWh/yearCPPA energy purchase priceIllustrative assumptionNT$6/kWhAnnual notional contracted purchase value50,000,000 kWh × NT$6/kWhApprox. NT$300 million/yearIllustrative unmatched shareIllustrative assumption20%Annual unmatched electricity volume50 GWh × 20%10 GWh/yearNotional value associated with unmatched volume10,000,000 kWh × NT$6/kWhApprox. NT$60 million/yearIllustrative CPPA termMidpoint of 20–30 year long-term offtake arrangements25 yearsCumulative notional value of unmatched portionNT$60 million × 25 yearsApprox. NT$1.5 billionNote: The 20% unmatched share is an illustrative assumption informed by scenarios reflected in industry discussions. It does not represent the average Surplus RE ratio among Taiwan companies or a future market forecast. The 25-year term is based on the midpoint of approximately 20- to 30-year long-term CPPAs already seen in Taiwan’s large-scale offshore wind market and does not represent a standard market tenor. Actual outcomes will vary according to corporate load profiles, procurement volumes, energy mix, project generation characteristics, contractual terms, and commercial-operation timing. NT$6 per kWh is likewise an illustrative energy purchase price and does not represent the full cost of corporate renewable energy procurement.This calculation should not be read as treating unmatched electricity as a direct “market loss.” Its purpose is to show how Surplus RE treatment can affect long-term procurement decisions. Where treatment mechanisms, environmental attributes, and related costs lack sufficient predictability, companies may reflect those risks in procurement volumes, pricing, or contractual terms.These decisions can in turn affect developers’ offtake arrangements and revenue predictability, with implications for project investment and financing. The significance of Surplus RE therefore lies not only in reducing unmatched volumes, but also in improving predictability for long-term procurement and financing, supporting continued growth in corporate renewable energy procurement and new supply.Public-Private Collaboration Is Gradually Improving Market DesignSurplus RE intersects with corporate procurement contracts, renewable energy certificates, project finance, transmission and distribution costs, and power-system operations. It is therefore a cross-institutional, multi-stakeholder market-design issue that cannot be addressed by any single mechanism or participant.The public-private collaboration approach recently articulated by Taiwan’s Executive Yuan Office of Energy and Carbon Reduction is consistent with this need. Relevant government agencies, Taiwan Power Company, and industry participants have held multiple rounds of discussion on flexible allocation, Surplus RE certificates, cross-time treatment of unmatched electricity, and tariffs, bringing policy objectives, corporate needs, commercial conditions, and power-system constraints into a common framework.The SEMI Energy Collaborative has also contributed through member input and policy dialogue, bringing corporate procurement practices, project commercial conditions, and market experience into policy discussions. This helps stakeholders examine practical issues together and identify arrangements that balance market efficiency, investment viability, environmental integrity, and system stability.Monthly Matching Within the Same Time-of-Use Period Is an Important StepOn September 3, 2026, Taiwan Power Company revised the Flexible Allocation Pilot Program for the Renewable Energy Market and its related operating rules. Under the existing pilot framework, the revision introduced monthly matching by time-of-use period and extended the pilot through September 30, 2028. This represents a further step in improving matching and allocation flexibility in Taiwan’s corporate renewable energy market. The revised mechanism continues to use the original 15-minute metering data as its underlying basis, aggregating generation and consumption into four time-of-use periods—peak, semi-peak, off-peak, and Saturday semi-peak—before conducting wheeling-volume matching and flexible allocation within the same month and the same time-of-use period.Table: Key Adjustments to the Flexible Allocation Mechanism for Renewable EnergyAspectPrevious FrameworkDirection After the AdjustmentUnderlying metering data15-minute generation and consumption dataStill based on 15-minute dataMatching approachMatching based on the existing time-based rulesMonthly matching within the same month and the same time-of-use periodTime-of-use periods—Peak, semi-peak, off-peak, and Saturday semi-peakAllocation modelsExisting wheeling arrangementSingle legal-entity allocation; electricity retailer allocationMain objectiveMaintain traceability and recognition qualityImprove matching and allocation flexibility while preserving traceabilityPilot periodExisting pilot frameworkExtended through September 30, 2028Note: The adjustment does not eliminate 15-minute metering. Rather, it builds on the existing metering basis by introducing monthly matching and flexible allocation within the same time-of-use period.The program retains two allocation models: “single legal-entity allocation” and “electricity retailer allocation.” This gives companies greater flexibility to allocate renewable electricity across different facilities, electricity account numbers, and load profiles, while allowing electricity retailers to play a role in electricity-volume aggregation and allocation.The core value of the mechanism lies in improving the matching and use of existing renewable electricity while preserving traceability. The longer pilot period also gives the market more time to build operating experience, validate practical needs, and inform further refinement.The Next Step for Surplus RE Goes Beyond “Eliminating Surplus”Monthly matching within the same time-of-use period can improve flexibility in matching generation and consumption. Even after flexible allocation, however, differences between generation and consumption profiles may remain across time periods. The next question therefore becomes how unmatched electricity should be treated and how its associated environmental attributes can be preserved, valued, and effectively used.There has also been concrete progress on the certificate framework. In April 2026, Taiwan’s Bureau of Standards, Metrology and Inspection (BSMI) proposed draft amendments to the Regulations Governing the Implementation of Renewable Energy Certificates. Under the proposal, renewable energy generators that have not entered into a surplus-electricity purchase and sale agreement with Taiwan Power Company could still obtain renewable energy certificates for Surplus RE, while certificates that have not been used or claimed could be transferred to other recipients.Subsequent policy discussions have also moved toward treating physical electricity and environmental attributes separately. Under the approach being examined, physical electricity that does not complete its intended wheeling arrangement would be handled through the power system, while corresponding certificate issuance based on actual unmatched volumes remains under consideration, with certificate ownership determined by contractual arrangements. The core concept is to separate the treatment of physical electricity from the preservation of environmental attributes, so that failure to complete time matching does not necessarily mean losing the associated environmental value.This does not weaken the traceability established under the existing wheeling and certificate framework. Rather, policy discussions are examining how environmental attributes associated with unmatched electricity can be treated appropriately while keeping the status of different electricity volumes clearly distinguishable. Note: The accompanying illustration reflects the current direction of policy discussion. It does not indicate that all rules governing the issuance, transfer, or compliance use of Surplus RE certificates have been finalized.Even if a future framework allows corresponding certificates to be issued for Surplus RE, two issues will still require clarification. The first is market value. Under take-or-pay contracts, corporate payment obligations generally do not change with the final matching outcome. If the unmatched portion primarily retains its environmental attributes, its cost and value structure may differ from that of a conventional certificate transaction, while the time value of electricity and the value of environmental attributes will still need to be clarified through market practice.The second is regulatory use. How such certificates should be identified, and whether they may be used for domestic greenhouse-gas inventories, carbon-fee offsets, or other environmental-management purposes, will require further coordination among the relevant energy, certificate, and environmental authorities.Cross-time unmatched electricity may require additional market tools. Energy storage is one possible pathway, but its economics, transaction structure, and practical operation still require market validation. It is therefore better considered as one of several possible solutions rather than the single answer.Beyond Market Efficiency, Cost Predictability Also MattersSurplus RE treatment also involves costs associated with power-system balancing, dispatch, transmission, and distribution. For industry, the issue is not to challenge reasonable user-pays principles, but to clearly define the costs reflected in different tariff components and the logic used to calculate them, while improving the transparency and predictability of tariff adjustments. Recent policy and industry discussions have also begun reviewing these system costs alongside the existing wheeling-tariff framework, with the aim of developing clearer and more predictable charging arrangements.This is particularly important for long-term CPPAs. Corporate renewable energy procurement is typically built on multi-year cost assumptions, headquarters approvals, and financial planning. Reasonable recovery of system costs and greater cost predictability are not conflicting objectives. A transparent, phased, and predictable tariff framework can support longer-term procurement, investment, and financing decisions by companies, developers, and financial institutions.From Market Matching to System ReadinessAny discussion of the next step for Surplus RE also needs to distinguish between today’s market-matching issue and the power-system challenges that may emerge at higher levels of renewable energy penetration. The Surplus RE discussed in this article is fundamentally a matter of matching, allocation, and environmental-attribute recognition under existing renewable energy procurement and wheeling arrangements. It should not be equated with physical electricity oversupply at the system level.As renewable energy supply and new electricity demand grow in parallel, however, differences in when and where electricity is generated and consumed will place increasing demands on power-system capacity and flexibility. The current market-matching issue and future system-level challenges should therefore remain conceptually distinct, while still being connected within long-term energy-transition planning.Table: From Current Market Matching to Future System ReadinessAspectCurrent Surplus RE IssueSystem Issue at Higher Renewable Energy PenetrationCore issueGaps in corporate wheeling, matching, and recognitionSystem-level differences in when and where electricity is generated and consumedNature of the issueMarket and institutional matching issuePhysical power-system issueMain toolsMatching mechanisms, flexible allocation, certificate treatment, and contractual arrangementsGrid capacity, substations, storage, and other system-flexibility resourcesMain focusImprove the use and allocation efficiency of existing renewable electricitySupport higher levels of renewable energy penetrationShould not be interpreted asTaiwan already having too much renewable energy—Note: The current Surplus RE issue primarily concerns market matching and recognition under existing procurement and wheeling arrangements. It should not be confused with physical electricity oversupply at the power-system level.Recent BNEF analysis identifies data centers as a major driver of global electricity-demand growth, while stable and sufficient grid access has become an important consideration in large-scale data-center siting. As facilities grow in scale, requirements for power supply, connection capacity, substations, and overall system resilience also increase.Taiwan’s energy transition presents similar system-planning needs. Solar and wind are variable, and new generation may not always be located where new electricity demand emerges. At the same time, growth in AI, semiconductor manufacturing, and other high-tech industries is reshaping existing demand patterns. Future policy discussions therefore need to address grid capacity, substations, energy storage, and other system-flexibility resources alongside continued improvements in renewable energy supply and market design.These infrastructure requirements are better understood as a necessary evolution in response to changing generation and consumption patterns, rather than as evidence that the existing grid itself is somehow “the problem.” Just as the digital economy’s transition from traditional networks to cloud computing, streaming, and artificial intelligence has required continued upgrades to fiber networks, data centers, and network capacity, the energy transition likewise requires market mechanisms and physical power infrastructure to evolve with new generation and consumption patterns.Improving Surplus RE treatment therefore addresses today’s market-efficiency challenge, while strengthening the grid, energy storage, and system flexibility prepares Taiwan for the next stage of higher renewable energy penetration.An Important Milestone, Not the EndpointRecent institutional progress builds on years of policy dialogue and practical experience among government, renewable energy developers, corporate users, utilities, and other market participants. More than a year of engagement on Surplus RE has also reinforced an important lesson for the SEMI Energy Collaborative: the maturation of the corporate renewable energy market requires integrated consideration of corporate procurement, electricity matching, certificate recognition, cost structures, power-system operations, and project investment and financing.Improving Surplus RE treatment is not simply about reducing unmatched electricity in particular time periods. It is about establishing clearer and more predictable treatment mechanisms so that companies, developers, and financial institutions can more effectively assess long-term procurement, project revenues, and investment and financing conditions. Continued discussions among government, Taiwan Power Company, and industry on flexible allocation, Surplus RE certificates, cross-time treatment, and related tariffs are also building practical market experience and providing a foundation for further institutional refinement.This remains an interim milestone. Questions surrounding the value of physical electricity and environmental attributes associated with Surplus RE, certificate recognition for compliance purposes, cross-time treatment, and system readiness at higher levels of renewable energy penetration will continue to require validation through practical implementation and cross-agency coordination.For the SEMI Energy Collaborative, the next step is to continue bringing industry needs, international market developments, and Taiwan’s energy-transition conditions into the same dialogue, helping stakeholders identify workable shared pathways. This milestone is not the endpoint, but the starting point for the next stage of market development. Ultimately, the objective is not simply to ensure that companies can procure renewable energy, but to build a market in which renewable electricity can be used effectively, costs are predictable, and corporate investment and renewable energy supply can continue to scale.AcknowledgementsThe Surplus RE issues and related institutional developments discussed in this article build on long-term dialogue and practical experience accumulated across government, industry, research institutions, and other market participants.The SEMI Energy Collaborative sincerely thanks the Executive Yuan, the Executive Yuan Office of Energy and Carbon Reduction, the Ministry of Economic Affairs, the Energy Administration, the Bureau of Standards, Metrology and Inspection, Taiwan Power Company, the SEMI Green Energy and Sustainability Alliance (GESA), the Taiwan Green Energy Public Welfare Development Association, and Energy Collaborative member companies for their valuable input and support through policy exchanges, technical discussions, sharing of market experience, and institutional deliberations.Special thanks are extended to Dr. Jing-Ming Wang and Dr. Chung-Shun Chen of the Green Economy Research Center, Chung-Hua Institution for Economic Research (CIER), for their professional insights and discussion on relevant research, policy context, and market developments during the preparation of this article.These long-term, cross-sector exchanges have deepened shared understanding of corporate needs, policy objectives, and power-system operations, while supporting the continued improvement and maturation of Taiwan’s corporate renewable energy market.Key ReferencesPresentations by the Executive Yuan Office of Energy and Carbon Reduction, RE100, and BloombergNEF at the Energy Collaborative Forum on September 4, 2026. The 2016–2025 renewable electricity generation-share figures cited in this article are drawn from the presentation by the Executive Yuan Office of Energy and Carbon Reduction.Bureau of Standards, Metrology and Inspection, proposed amendments to the Regulations Governing the Implementation of Renewable Energy Certificates, announced on April 10, 2026.Policy exchanges among the SEMI Energy Collaborative, relevant industry representatives, government agencies, and Taiwan Power Company, together with the author’s synthesis.Taiwan Power Company, Flexible Allocation Pilot Program for the Renewable Energy Market and related operating rules, latest revised version.Ørsted, 2025, official project information for the Greater Changhua 2b 4 Offshore Wind Farms; the project is supported by a 20-year fixed-price corporate PPA arrangement.Northland Power, 2026, official announcement regarding the Hai Long Offshore Wind Project; the project includes a 30-year corporate PPA arrangement.U.S. Environmental Protection Agency, Renewable Energy Certificates (RECs); one REC is created for each MWh of renewable electricity generated and delivered to the grid, and the certificate may be traded separately from the underlying physical electricity.Ofgem, Renewable Energy Guarantees of Origin (REGO) – Guidance for Generators, Agents and Suppliers; one REGO is issued for each MWh of eligible renewable electricity generated, and the certificate may be transferred with or separately from the underlying electricity.David (Ta-Wei) Chiang is SEMI Energy Collaborative Lead at SEMI Taiwan.

Co-Packaged Optics (CPO) at Scale: Silicon Photonics, Automation, and Standards for the AI Era – an interview with Vikas Gupta, Senior Fellow, Silicon Photonics business at GlobalFoundriesAI and cloud workloads push electrical interconnects to their limits, the industry is re-architecting how light meets silicon. In our interview with Vikas Gupta, senior fellow, silicon photonics business at GlobalFoundries (GF), he explained how detachable fibers, wafer-level photonics, and new MSAs are laying the groundwork for high-volume co-packaged optics.Why co-packaged optics now?Data center architectures are straining under escalating bandwidth demands and power limits, especially with the rise of generative AI and dense GPU clusters. Copper traces on PCBs can still move data at high rates, but doing so requires higher signal amplitudes, complex equalization, pre-emphasis, and forward error correction—with significant power penalties. Co-packaged optics address this by moving the optical interface much closer to the electrical signal source, shrinking copper reach and improving overall energy efficiency.Beyond switch scale-out, optical interconnects now underpin large, tightly coupled GPU systems where many devices must communicate simultaneously at extreme bandwidth. Optical fibers offer a unique advantage here: multiple wavelengths can be transmitted over the same fiber using wave division multiplexing (WDM), enabling significantly more throughput than a single copper link without signal interaction between channels.Silicon photonics in a CMOS fabOne enabler for CPO at scale is the ability to manufacture photonic integrated circuits (PICs) on existing CMOS lines. At GF’s Malta, New York facility, more than 90% of the CMOS toolset is reused for silicon photonics, with only a few dedicated modules required for specialized steps such as advanced modulators or laser integration. This reuse allows foundries to leverage mature process control, existing capital, and established high-volume practices rather than building an entirely new line.Silicon itself is an indirect bandgap material and cannot lase efficiently, so external light sources are needed. Today, materials such as indium phosphide are typically used to generate O-band wavelengths, with epitaxial engineering tailored to produce multiple discrete wavelengths for CWDM and beyond. As the industry tries to pack more data into each fiber, these multi-wavelength laser systems become more complex and must maintain wavelength stability even as devices self-heat.Detachable fibers and wafer-level photonicsA core manufacturing challenge for CPO is how to attach and test optics without sacrificing yield or automation. The idea of detachable fibers originally surfaced around repairability, but Vikas noted that detachability is now more about manufacturability and automation. By decoupling the fiber from the photonic IC during most of the manufacturing flow, fabs can avoid carrying fragile pigtails through multiple process steps and instead attach fibers later in a more automated way.This approach fits naturally with wafer-level processes.Surface coupling via grating couplers or turning mirrors can be implemented at wafer level, enabling optical interfaces without dicing first.Wafer-level optical testing becomes possible, allowing early detection of bad die before expensive packaging and assembly steps.Surface coupling relaxes the beachfront density limits of edge coupling; instead of being constrained by die periphery, designers can use the full surface area for optical I/O.By shifting more optical structures and tests up to the wafer level, the industry can align CPO with high-volume silicon manufacturing practices: more automation, fewer manual fiber-handling steps, and higher throughput.Alignment, DFM, and testing for known good modulesAligning a 125-micron fiber to a sub-micron photonic waveguide illustrates the fundamental mechanical-to-electrical challenge in CPO. Vikas outlined three families of alignment techniques.Active alignment remains the industry staple, especially for pluggables, using live optical power feedback to iteratively adjust fiber position until maximum coupling is reached before locking it in place.Passive alignment relies on semiconductor-precision mechanical features such as etched V-grooves at the die edge, which provide self-aligned seating for fibers.Vision-based alignment uses fiducial marks on both the photonic IC and mechanical structures; advanced systems align crosshairs to position fibers or optical components with high accuracy.As these systems grow more sophisticated, the same vision infrastructure supports both assembly and test. Design for manufacturability (DFM) is critical too: photonic layouts often include curvilinear shapes and sparse patterns compared to Manhattanized CMOS logic, so designers must avoid issues like dishing that could “polish away” critical waveguides. Design teams also must build in tolerance to mechanical misalignment so that realistic packaging tolerances do not compromise optical performance.Testing strategy is another key lever for yield and cost. To support known good die and known good modules, GlobalFoundries is pushing tests upstream and inserting multiple test points throughout the optical engine build. As the bill of materials accumulates—from PICs to electrical ICs to fibers and full modules—early testing allows fabs to weed out bad die before adding more cost. Final stage tests still need to run the complete engine at speed and perform compliance checks, but earlier stages reduce the probability of expensive late-stage failures.Thermal management in the age of liquid-cooled CPOBy definition, co-packaged optics places the optical engine next to high-power ASICs or GPUs, exposing sensitive photonic components to intense thermal environments. GPUs and switches rely increasingly on advanced air and liquid cooling, and CPO engines benefit from the same infrastructure, but they still sit near a dominant heat source.Historically, lasers have been kept off-die for CPO because many III–V materials do not behave well at high temperatures. At the same time, the desire for greater integration is pushing industry to bring these light sources, such as InP–based lasers and optical amplifiers, closer to or onto the silicon die. This tension is driving significant reliability and packaging research to ensure long-term stability under high-temperature operation.Thermal considerations are now explicit in emerging standards. Vikas pointed to the latest XPO MSA (eXtra-dense Pluggable Optics Multi-Source Agreement), which incorporates liquid cooling into the package form factor itself—a clear recognition that thermal management must be engineered at the architecture level, not treated as an afterthought.Standardization: from proprietary links to open ecosystemsCPO began in a world of proprietary, bookended systems: one vendor’s GPU talking only to the same vendor’s GPU, or a single company’s switch ASICs communicating over closed optical interfaces. This created interoperability barriers and limited ecosystem scale.Optical Fiber Communication Conference 2026 marked a turning point, with multiple multi-source agreements (MSAs) emerging around CPO and AI optics.The Optical Compute Interconnect (OCI) Multi-Source Agreement, backed by companies including Broadcom, AMD, Nvidia, and OpenAI, focuses on optical signaling—establishing protocols so systems from multiple vendors can interoperate optically, even though it does not yet define the electrical side.The Open CPO/CPX MSA, driven largely by optical vendors, targets socketed CPO and emphasizes mechanical form factor rather than signaling.These efforts share a common recognition: the “wild west” of proprietary CPO implementations is unsustainable if the industry wants true scale. Standardization inevitably increases competition, but it also broadens participation, enables vendor mix-and-match, and accelerates adoption by system builders who need robust, multi-sourced ecosystems. Vikas expects these initial MSAs to be the first wave of ongoing standardization that will cover signaling, packaging, and system-level requirements. Looking aheadScaling CPO for AI and cloud workloads will require tight coordination across device, process, packaging, and system communities. Silicon photonics lines that reuse CMOS tooling can supply the necessary volumes, but only if design teams embrace design-for-manufacturing (DFM) and tolerance-aware layouts, and if fabs push test earlier into the flow to guarantee known good modules. Detachable fibers, wafer-level coupling and testing, and sophisticated alignment systems are all moving CPO manufacturing toward higher automation and yield.In parallel, thermal and standardization challenges are being addressed head-on through package-level liquid cooling features and new MSAs that open the ecosystem beyond single-vendor islands. Together, these trends suggest that CPO will not remain a niche technology—rather, it is on a path to becoming a mainstream building block for the next generation of AI and data center infrastructure.Anshu Bahadur, SEMI

Artificial intelligence (AI) is scaling at a pace that is reshaping semiconductor roadmaps, data center design, and long-term infrastructure strategy. AI promises many economic and social benefits; but the growth comes with an escalating demand for power, and energy has emerged as a major challenge.SEMI, as the global semiconductor and electronics association connecting over 4,000 companies, continues to unite the entire ecosystem to “bend the curve” – to maximize AI performance while minimizing power consumption. In a series of successful, sold-out workshops that the SEMI Smart Data-AI Initiative held on this topic, a resonant theme has emerged: sustaining AI progress requires energy-efficient computing with holistic co-design and co-optimization across materials, devices, systems, data transmission, data centers, emerging architectures and software. While this dialog is an important starting point, the ultimate goal is to drive concrete action through collaborative innovation.The AI Energy ChallengeAI training compute for frontier models is growing at an estimated 4–5x per year, driving unprecedented demand for hardware capability and infrastructure capacity. That trajectory has resulted in a global “data center gold rush” and is testing energy availability limits. As model sizes scale exponentially, so too does the energy required to train and deploy them; and power consumption has become a significant limiter to performance gains. Further, this increases heat dissipation, and requires innovations like direct liquid cooling.Modern AI and high-performance computing systems now operate at levels comparable to small cities, with tens of megawatts per installation and a trajectory toward gigawatt-scale data center campuses. Grid capacity—both in the U.S. and globally—may be challenged to keep pace with projected demand. Thus, AI infrastructure is no longer just a technical challenge, but it is an energy, systems, and policy challenge.System-Technology Co-OptimizationContinuous advances in chip and inference efficiency have delivered orders-of-magnitude improvements over many decades. These gains must now be expanded by holistic co-optimization of the entire compute system from silicon technologies to data center to the grid.For example, processors can be made more efficient by customizing them for specific workloads. However, only part of total data center power is consumed by the processor itself. A significant portion is used by data movement, power conversion and cooling. The energy required to move data increases dramatically with distance. Moving bits across packages, boards, and networks can consume far more energy than the compute operations themselves. This makes locality a critical design principle. The opportunity—and necessity—therefore lies in cross-layer optimization: efficient compute, efficient communication, and intelligent power management across the entire system. Not surprisingly, advanced packaging and integration are becoming central to performance. These technologies can enable architectures that tightly couple compute, memory, and I/O—using 2.5D and 3D integration techniques—reducing energy per bit and increasing bandwidth. Photonic interconnects and low-power materials can further lower the cost of processing and moving data.The bottom line is that incremental chip-level gains alone will not be sufficient and energy optimization cannot be siloed—system-technology co-optimization is needed.Hardware-Software Co-optimizationKeeping data as localized as possible depends as much on software algorithms as it does on hardware architectures. The challenge is that the development cycles are mismatched: new software models can be developed in months, while designing and fabricating new hardware can take years. While this cycle mismatch is fundamental, closer coordination between hardware and software developers can significantly improve efficiency. For example, offloading selected functions in the algorithm, including distributed DPUs, and reducing the level of data precision can reduce energy use. Partitioning workloads logically across the hardware/software stack between cloud services and compute-on-edge can also reduce energy appreciably. Further, risk mitigation techniques—for example, building in strategic redundancy—can make future designs more resilient to shifts in software algorithms and models.Diverse Computing ModalitiesWhile AI dominates current infrastructure investment, the future of computing will likely include multiple, diverse computational modalities such as quantum, neuromorphic, photonic and analog computing.Different computational paradigms will be applied where they are most effective. For example, quantum computing is likely to complement—not replace—classical systems; especially for specific classes of problems where it offers exponential advantages. However, progress in quantum computing is tightly coupled to advances in semiconductor infrastructure. Error correction, orchestration, and hybrid algorithms all depend on high-performance classical systems operating with low latency alongside quantum processors. While there is no single silver bullet, system-level design can ensure that multiple computing modalities work together within unified workflows spanning edge, cloud, and exascale environments.Why It Matters What to WatchEnergy will now be a key constraint for AI performance and infrastructure expansion.The evolution of gigawatt-scale AI campuses and their interaction with public energy grids will accelerate – or slow down – AI growth.Data movement, memory bandwidth, interconnect efficiency, advanced packaging and heterogeneous integration will be strategic levers. Enhanced system-technology co-optimization and integration of advanced technologies like 3D ICs and photonics will be critical.Co-optimization across hardware, software, and systems will be required.Future architectures will blend classical and emerging compute modalities like quantum, photonic and neuromorphic.In conclusion, AI has become a defining global force with much promise, but its trajectory will be shaped by technology, energy and infrastructure economics working together. This is a formidable challenge because it requires many diverse players with divergent priorities to collaborate effectively.We invite you to join the SEMI Smart Data-AI initiative to collaboratively address this challenge and help realize AI’s full potential sustainably. Our next workshop in this series will be on September 9 in Silicon Valley – please join us for this exciting event.SourcesSEMI Smart Data-AI Initiative – Future of ComputingEnergy-Efficient Computing for AI and Beyond, SEMICON West, October 2025Sustainable AI Systems, SEMI HQ, March 2026About the AuthorsDr. Pushkar P. Apte is the Strategic Technology Advisor for SEMI Global Lead for the Smart Data-AI Initiative Dr. Melissa Grupen-Shemansky is Senior VP and CTO of SEMI

This blog series explores how collaboration between industry and academia can empower the next generation of semiconductor innovators. Through insights from leaders, educators, and students, we’ll showcase effective strategies for bridging the talent gap, fostering innovation, and creating meaningful career pathways in the semiconductor industry.As innovation accelerates and new challenges emerge, the industry’s greatest breakthroughs will come from bold, curious students, young professionals, and lifelong learners ready to build what comes next. SEMI spoke with Professor Antonio Costa of the University of Catania about attracting the next generation to STEM, the emerging skills required in the semiconductor industry, and examples of impactful collaboration with local industry, along with many other insights.Costa shared his perspectives following his participation in the SEMI on Campus program, held on April 16, 2026, in Catania, Italy. SEMI: What emerging skills do you believe will be most essential for the next generation of semiconductor innovators, and how can industry and academia work together to nurture them?Costa: I firmly believe in the role of interdisciplinary skills. The next generation of semiconductor innovators will need a blend of deep technical expertise, cross-disciplinary thinking, and adaptability to rapidly evolving technologies specifically based on artificial intelligence. The future semiconductor innovator isn’t just a circuit designer. They’re a systems thinker, data scientist, and materials engineer rolled into one. The most successful ecosystems will be those where academia teaches fundamentals, and industry provides real-world constraints, tools, and scale. So, university and industry should work together to share their knowledge and technological infrastructures with the aim of supporting the next generation of semiconductor innovators. SEMI: In your work with young engineers and researchers, what approaches have you found most successful in nurturing creativity and sustaining curiosity in such a technically complex field? How do you think we can attract the next generation to enter the STEM studies?Costa: Curiosity and creativity are two major features for researchers and engineers in general. Over the years of teaching and coordinating research activity, I have been able to observe that students are increasingly drawn to challenges coming from the industrial world. In a way, one could say that complexity often stimulates curiosity, and when this happens, students are able to deliver their best performance in terms of creativity and quality of results. In my courses, students have always been required to tackle an industry-inspired project work to be eligible to pass the exam. Every year, I invite industry representatives from local manufacturing companies to present real case studies to the classroom, describing their key elements, constraints, and objectives. Students are then asked to solve the industrial case study by applying the problem-solving techniques learned during the course. Based on my experience, I believe that a greater intensity in the relationship between the industrial and academic worlds can further stimulate students' curiosity and the interest of new generations.SEMI: What do you believe are the most significant barriers for students entering the semiconductor industry today, and how can academia help bridge these gaps?Costa: As usual, the main barriers for students concern the gap between the theoretical study mindset developed during university courses and the demands of the industrial world in terms of teamwork skills, problem-solving abilities, and soft skills. Universities and industry should find greater opportunities for collaboration, for example by establishing shared laboratory activities or seminars during which managers from semiconductor companies, and beyond, illustrate the essential aspects of working life and the primary needs of the semiconductor industry. At the same time, it would be advisable to emphasize the employment and career opportunities that the semiconductor industry is currently able to offer. Hackathons, that have a competitive orientation, could also represent a valid stimulus that companies and universities could pursue jointly and on a regular basis.SEMI: How can universities and industry partners collaborate more effectively to create learning experiences that truly unlock students’ potential and prepare them for the sector’s evolving demands? Professor Antonia Costa, University of Catania and Daniele Pagano, STMicroelectronicsCosta: Shared laboratories, curricular and extracurricular internships scheduled on a continuous basis, and periodic seminars held by company representatives with diverse areas of expertise can make a positive contribution to rapidly and robustly unlocking the learning potential of today's students and tomorrow's new hires. In December 2021, the University of Catania and STMicroelectronics signed a framework agreement to strengthen collaboration in the field of power electronics, with a focus on advanced research and training. The agreement aims to support technological innovation and the development of professional skills in the semiconductor sector, including:Research and development: the launch of projects focusing on increasing power density, efficiency, and reliability of power modules. Training and talent: funds for students’ awards, mentorship programs, internships, thesis projects.Innovation: support for technological growth and the development of professional expertise in power electronics. Regional ties: consolidation of Catania's role as a hub for semiconductor research, with strong synergy between the university and the local ST production site. Curricular internships linked to Master’s degree theses, supervised by faculty members across disciplines, primarily within Engineering, Computer Science, Physics, and Chemistry programs.SEMI: Can you share other examples of collaborations? Costa: Over the past decade, the University of Catania has been an active partner in multiple European consortia, supporting the development of research projects funded through highly competitive national and European programs. Currently, the University of Catania is engaged in collaborative research with STMicroelectronics through two Horizon Europe projects.In the first project, HiCONNECTS, the Department of Engineering is developing a digital twin architecture aimed at optimizing wafer lot dispatching at STMicroelectronics’ manufacturing facility in Catania.The second project, GENESIS, brings together the Department of Engineering and the Department of Chemical Sciences to pursue an ambitious sustainability objective: the development of innovative methods to identify and reduce per- and polyfluoroalkyl substances (PFAS) generated by semiconductor manufacturing processes, thereby mitigating environmental impact."The role of universities is to help students recognize their potential and guide them toward fields where their abilities can truly flourish. Initiatives like SEMI on Campus are invaluable, as they inspire students through direct engagement with professionals, helping bridge the gap between theory and industrial practice." -- Professor Antonio Costa, University of Catania .custom-quote-block { border-left: 4px solid #d9d9d9; padding-left: 26px; margin: 24px 0; } .custom-quote-block blockquote { margin: 0; padding: 0; border: none; } .custom-quote-block p { margin: 0; font-size: 18px; line-height: 1.6; font-style: italic; color: #000; } SEMI: Looking ahead, what role do you see educators playing in shaping the future of semiconductor innovators? Costa: The role of educators, both in schools and, above all, in universities, is to help students recognize their own potential and develop the maturity needed to identify and pursue those fields of knowledge that best highlight their abilities.The SEMI on Campus initiative was immediately embraced by many universities and by myself, as it offers students from diverse academic backgrounds the opportunity to understand the key skills sought by players in the semiconductor industry, while also highlighting the employment and career paths available in this field.The opportunity to hear directly from prominent speakers who work daily in semiconductor design and manufacturing represents a powerful way to stimulate students’ curiosity and potential, while helping to bridge the gap between the theoretical knowledge acquired in university classrooms and the practical, results‑oriented approach required in an industrial environment.The benefits for students are broad and significant, as they can assess their own aptitudes and ambitions against the real demands of semiconductor companies, drawing inspiration and insight from firsthand accounts shared by industry professionals.Antonio Costa is a full professor at the University of Catania (DICAR Department). He teaches Production Planning and Control in the Master’s degree in Engineering Management, and Advanced Technologies for Manufacturing Processes in the Master’s degree in Mechanical Engineering.His research activities are mainly focused on production scheduling, supply chain dynamics, manufacturing process optimization and Statistical Process Control (SPC). He is area editor for Computers Industrial Engineering, member of the Italian Association of Manufacturing Technologies (AITeM) and leads several research collaborations with STMicroelectronics.Interested in bringing SEMI On Campus to your institution or welcoming an industry expert as a guest speaker?Reach out to [email protected]. Let’s work together to inspire the next generation of semiconductor leaders!Related Initiatives:SEMI 20 Under 30: The SEMI 20 Under 30 Awards recognize exceptional young leaders in the semiconductor industry who are making significant contributions and driving innovation. Nominations are open!ChipQuest: The ChipQuest Challenge promotes the microelectronics industry to students to build future talent. University and high school students can participate and win amazing prizes! Serena Brischetto is Director Marketing and Digital Engagement at SEMI Europe.

At SEMICON West, cybersecurity experts from across the semiconductor value chain—fabs, design houses, toolmakers, suppliers, and research institutions—outlined a sobering truth: the semiconductor sector is entering a new era of exposure.

At SEMICON West, McKinsey’s James Kaplan delivered one of the event’s defining keynote addresses, outlining how semiconductor manufacturers must reshape their cybersecurity strategies to meet the realities of hyperconnected industrial operations.

At SEMICON West, McKinsey’s James Kaplan delivered one of the event’s defining keynote addresses, outlining how semiconductor manufacturers must reshape their cybersecurity strategies to meet the realities of hyperconnected industrial operations.

At SEMICON West, Accenture’s Bradford Hegrat offered a candid assessment of one of the semiconductor industry’s most persistent—and least visible—cybersecurity challenges: operational technology (OT) technical debt.