April 22, 2026 /SemiMedia/ — Advanced Micro Devices is working on a co-packaged optics (CPO) design for its next-generation Instinct MI500 accelerator, as it looks to improve data center performance and strengthen its position in the AI chip market.

According to media reports, the new design will use a multi-chip module approach, with photonic integrated circuits to be manufactured by GlobalFoundries and packaging handled by ASE. The move highlights AMD’s focus on advanced packaging and high-speed interconnect technologies.

CPO is seen as a way to improve bandwidth and reduce power use in data center systems by bringing optical links closer to the chip. This could help support growing demand for AI workloads that require faster data movement.

Separately, market talk suggests AMD may secure orders from AI startup Anthropic, with its Instinct MI450 accelerators expected to provide computing power. As demand for AI chips rises and supply remains tight, large tech companies are starting to diversify suppliers instead of relying on a single vendor.

In recent years, AMD has expanded its presence in the data center AI market, winning customers such as OpenAI and Meta. Meta has signed a deal covering about 6 gigawatts of computing capacity across multiple generations of Instinct accelerators.

The combination of new packaging technologies and a broader customer base could help AMD improve its competitiveness as the AI chip market continues to grow.