TSMC is embarking on a major expansion of its photonic integrated circuit (PIC) production capacity. The company aims to boost its monthly output from the current level of approximately 500 wafers to a minimum of 25,000 wafers by 2028. This ambitious plan signifies a staggering 30-fold increase within a mere three-year timeframe. Such a substantial expansion will inevitably result in a remarkable year-on-year growth in PIC production volume, accompanied by a parallel surge in the shipment of optical engines. Leading customers are poised to be the main beneficiaries of this expansion. Moreover, it is expected to stimulate demand growth in downstream sectors, including Fiber Attenuation Units (FAU) and lasers. This strategic move by TSMC marks a pivotal transition of Co-Packaged Optics (CPO) technology from the experimental laboratory phase to the preparatory stage for mass production, thereby strengthening the AI optoelectronic integration platform. However, the path to full-scale CPO production based on PICs is not without challenges. Multiple backend processes need to be overcome. The actual pace and scale of the production ramp-up will largely hinge on the yield improvements achieved at each stage of the process.