New TV: what to do with TOSLINK optical output

I've been using OREI Da34 Digital to Analog converter. Works just fine. Paid around $50. Problem solved. Bill.

An excellent little DAC for this purpose is the FiiO D03K. Available on many websites for $20. Something to check before purchasing this DAC,

The TV's optical out must be set to PCM. I have encountered a TV that this was not possible, so then you will need to use the OREI DAC mentioned above.

Also, does the TV have a mini-jack for headphones? If so, it is possible that this could be used without the need for a DAC.

What is the model number of the TV?

Your Cambridge 640A is a stereo analog integrated amp and has no DAC that’s the reason why it doesn’t have any optical digital input or any other digital inputs. Stereo analog integrated amps such as your Cambridge 640A only have analog audio inputs.

You will need to get a stereo integrated amp that has built-in DAC thus have digital audio inputs. Assuming that all your AV source devices have HDMI outs, if that’s the case and I imagine nowadays that all AV source devices would have HDMI outs, then you should consider getting the Cambridge AV receiver either the CXR120 or the CXR200. Cambridge Audio makes very good sounding av receivers and are priced reasonably. Then you can connect all your AV source devices using HDMI cables to the HDMI inputs on the Cambridge AV receiver. And you can use a single HDMI cable to connect the Cambridge AV receiver to your TV for video and OSD only. All AV receivers these days have at least one if not two HDMI output to connect to your tv display or a projector for video and OSD only. This would be the best way to set up.