Taiwanese precision automation equipment maker Dyadic Systems has formed an alliance with Japan's Suruga Seiki to capture the equipment business opportunities created by the AI silicon photonics boom — good news for both sides.

• Dyadic Systems and Suruga Seiki are jointly developing CPO optical coupling and alignment equipment, targeting demand from AI data centres for high-speed transmission.
• CPO technology places optical components and the switch chip on the same board, shortening signal transmission distances, and is the next focus area for the AI supply chain.
• The alignment between optical fibre and chip must be extremely precise, which is the biggest hurdle for yield rates; Dyadic Systems contributes its linear motor technology, while Suruga provides the fine-adjustment platform and light-seeking algorithms.
• Suruga holds close to an 80% share of Taiwan's optical coupling alignment platform market, making this a tie-up between the market leader and a local equipment maker.
• Small volumes of the related equipment have already shipped to several domestic equipment makers this year, but they account for less than 5% of Dyadic Systems' revenue.

Outlook: If final testing by downstream customers goes smoothly, shipments could scale up in the first half of next year, and the company aims to raise CPO's share of revenue to 10%.