You got it. We can't make optical transceivers as good as electrical ones. Not as small or power-efficient.
They require significantly different fabrication processes, and we don't know how to fab them into the same chip as electrical ones. I mean: you can either have photonics, or performant digital (or analog) electronics.
We've gotten really, really good at making small electronics, per the latest tech coming out of Intel & TSMC. We are... not that good at making photonics.
I wonder what the latency for switching medium is these days too (for the super small transceivers). To my understanding optical is better for attenuation than electric (less noise, and thus easier to shove more frequencies and higher frequencies on the same pipe), and can be faster (both medium dependent, neither yet approaching the upper bound of c).
I'm imaging the latency incurred by the transceiver is eventually offset from the gains in the signal path (for signal paths relevant to circuit boards and ICs)
The big issue is really 1. Photonic waveguides are much larger than electronic ones (due to the wavelength) 2. You loose dynamic range and in EO conversion (shot noise is significant at optical frequencies) 3. Co integration of optics and photonics components is nontrivial due to the different materials and processes. 4. Power efficiency of EO conversion is also not that great.
Where photonics shines is for transmission of high frequencies (i.e. a lot of data) over long distances and being immune to EM interference. So there is certainly a tradeoff for at what transmission distances to go optical and as data rates keep going up the tradeoff length has become shorter and shorter. Intel, Nvidia, AMD et al. All do research into optical interconnect.
If so, does that matter at all here? Dunno if that holds up for such kind of devices and/or at these scales (much shorter distance, but also much higher speed).
I'm not sure what kind of refractive indices are possible in much smaller photonic circuits, particularly if it's not practical to develop and run everything in a permanent vacuum.