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A compact 4times2-channel parallel optical MCM transceiver with data rates up to 3.125 Gb/s per channel was studied for very short reach (VSR) interconnection. The transceiver was based on 1times4 VCSEL and PD arrays of 850 nm wavelength, and a 12-fiber-ribbon as the transmission medium. Greatly relaxed alignment tolerance and high coupling efficiency between optoelectronic (OE) device arrays and fiber arrays were achieved. The eye-diagram at 2.5 Gb/s was measured under 231-1 pseudorandom bit stream (PRBS).