Taiwan Semiconductor Manufacturing Co (NYSE:TSM) and global chip designers and suppliers are accelerating the development of next-generation silicon photonic solutions over the next three to five years to address the massive energy and faster data transmission speeds needed by AI computing.

Hsu told Nikkei Asia that the silicon photonics market will grow at an annual compound rate of 40%, between 2023-28 to $500 million thanks to the demand for high data rate modules for increased fiber-optic network capacity, especially pluggable and co-packaged optics (CPO).

Rachid Taibi, general manager of the business unit at chip materials provider Soitec, told Nikkei that big tech giants, including Meta Platforms Inc (NASDAQ:META) and Microsoft Corp (NASDAQ:MSFT), are among those backing CPO technology development.

Taiwan Semiconductor stock gained 82% in the last 12 months. Investors can gain exposure to the stock through iShares Semiconductor ETF (NASDAQ:SOXX) and First Trust NASDAQ Technology Dividend Index Fund (NASDAQ:TDIV).

Price Action: TSM stock is down 1.77% at $168.66 premarket at the last check Tuesday.

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