Optical Transceiver Market

Optical Transceiver Market Outlook 2031

The global optical transceiver market size was valued at nearly USD 8.06 Billion in 2022 and is anticipated to reach USD 28.80 Billion by 2031, expanding at a CAGR of 15.2% during 2023 – 2031. The technological advancement and increasing adoption of cloud computing solutions is attributing to the market growth.

An optical transceiver is a compact, powerful device that sends and receives data. Data is transmitted in the form of light pulses above an optical fiber in optical communication and networking. The transceiver is an essential component of such a network as it converts electrical signals to light signals and vice versa. Various transceivers are open to multiple jobs depending on the type of data to be carried and the speed and distance.

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Hardware and software are essential in emerging infrastructure, and adopting open-source platforms through the cloud has made the network more compact. This, in turn, has led housing of drop modules for multiplexing and demultiplexing, variable optical attenuators, and tap power monitors in a single compact unit for network monitoring and control.

Furthermore, it has resulted in increased network complexity, creating delays in data packet delivery, which has increased demand for compact form factors. The form factor is recognized as a major choice for data center communication by a transceiver MSA group that includes Cisco, Broadcom, Juniper, Intel, and others. It has eight high-speed electrical connections that connect to the host, each capable of 100G/s.

The COVID-19 pandemic has had a substantial impact on the global optical transceiver market. The production facilities of the electronics and semiconductor sector were halted due to the global decline and unavailability of employees. The COVID-19 pandemic has resulted in a significant and sustained decline in manufacturing capacity, owing to a lack of employees and raw materials, travel restrictions, and facility closures, leading to a slowdown in the growth of the optical transceiver market in 2020.

Optical Transceiver Market Dynamics

Major Drivers 

The growing demand for cloud data centers is expected to drive the market. Technologies such as artificial intelligence (AI), virtual learning (VR), machine learning (ML), and augmented reality (AR) are enhancing from time to time which is expected to help the cloud data centers to improve the technologies. The optical transceivers market is developing owing to the improvement in interconnect bandwidth. Technological advancements are enabling optical interconnects to transmit data at up to 100 Gbps which is 10 times faster than traditional interconnects. Thus, enabling interconnect bandwidth is expected to boost the market during the forecast period.

Existing Restraints

The fragility of optical fibers is expected to hinder the market.  Optical fiber cables are mostly made of glass, for which they are more fragile than electrical wires. Additionally, underwater glass cables can get affected by numerous chemicals. The optical transceivers are difficult to install as they are prone to damage during the deployment process, the optic cables breaks if bend too much thus such factors are expected to restrain the market during the projection period.  

Emerging Opportunities

Rapid growth of cloud computing solutions in the field of fiber optics is likely to create lucrative opportunities for the market. Optical fiber implements the transmission of large amounts of data over a large bandwidth. With the help of optical fibers users can stream high-definition online videos and it is further useful for large-scale data transfers.

Optical fibers are used to connect data centers and cloud servers, depending on the type of fiber and equipment used. Optical transceivers are useful in saving energy with the help of cloud computing. Unlike, copper wires, optical fibers transmit data using light. This eventually helps to save electricity as data is transmitted through cloud networks.

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Scope of Optical Transceiver Market Report

The market report includes an assessment of the market, size, share, trends, segments, and regional markets. Overview and dynamics have been included in the report.

Global Optical Transceiver Market Segment Insights

Form Factor Segment Analysis

Based on form factor, the market is fragmented into SFF, SFP, QSFP, CFP, SFP+ and SFP28, XFP, and CXP. The QSFP segment is expected to dominate the market during the forecast period. The optical transceivers of the quad small form-factor pluggable (QSFP) modules are designed for high performance and low power consumption, finding them appropriate for data center applications. Data traffic is growing as a result of technological breakthroughs such as AI, machine learning, and 5G communication, creating a demand for large-scale data centers.

QSFP optical transceivers are capable of high data transmission and are used throughout datacom/telecom switch and router connections, data aggregation and backplane applications, customized protocol, and density applications. This form factor has low power consumption, which in turn, has increased preference among 800G transceivers, and their pluggable form factor is regarded as an ideal choice for data center connectivity.

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Data Rate Segment Analysis

On the basis of data rate, the market is segregated into less than 10 Gbps, 10 Gbps to 40 Gbps, 41 Gbps to 100 Gbps, and more than 100 Gbps. The 41 Gbps to 100 Gbps segment is estimated to grow significantly during the forecast period. The demand for higher data transmission drives the demand for 100G, 200G, and 400G transceivers. With the introduction of advanced technologies such as AI and 5G has grown the demand for higher bandwidth, which is eventually used for data center applications.

High-bandwidth apps, increased data transfer capabilities, fast-fixing broadband rates, rising online video content, mobile internet users, and the spread of connected gadgets have all contributed to the growth in Internet penetration traffic. Furthermore, the increasing adoption of smart devices and IoT is driving up demand for high data rate-enabled optical transceivers. Optical transceivers with speeds ranging between 41 Gbps to 100 Gbps and higher are increasingly preferred among global cloud services providers such as Amazon, Facebook, Google, and Microsoft.

The more than 100 Gbps segment is likely to hold a major share of the market during the projection period. The 400G transceivers are used and preferred to transmit and receive data at 400 Gbps speed. The most important difference between 400G modules and other models, like the 10G or 25G, is how they are applied. 400G transceivers are used to solve complex multi-carrier things whereas 10G transceivers are used for single-carrier applications. Moreover, The 400G transceivers are more expensive than other old transceivers.

Fiber Type Segment Analysis

Based on fiber type, the global market is segmented into single-mode fiber and multimode fiber. Single-mode fiber segment is accounted for a key share of the market in the coming years. Single-mode fiber optics helps to transmit single-mode of data over long distances. It allows one transmission at a time and transmits higher bandwidth requiring a light source of a limited spectral range. The revenue of single-mode optical fibers in 2023 is 570 Mn U.S. dollars. CATV providers, universities, colleges, and telecommunications companies use single-mode fibers over long-distance networks.

Wavelength Segment Analysis

In terms of wavelength, the market is divided into 850nm Band, 1310nm, 1550nm Band, and others. The 1310nm segment is estimated to account for a significant market share during the forecast period. 1310 nm bandwidth level is intended to perform at higher operating temperatures while using less power and spending less money. Single-mode fibers can be tailored for wavelengths of 1310 nm. At this wavelength, the attenuation of fiber optics is substantially smaller. High-speed data transfer is possible using optical transceivers operating in 1310 nm bandwidth.

Absorption losses are low at this wavelength. Therefore, the increasing requirement for high data rate transceivers and high-speed computing across data center applications supports the market growth segment. The CWDM (Coarse Wavelength Division Multiplexing) optical module is deployed for the 1310 nm wavelength, providing excellent flexibility, economy, and network dependability. It significantly saves optical fiber resources and lowers building costs.

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Connector Segment Analysis

On the basis of connector, the optical transceiver market is segmented into LC connector, SC connector, MPO connector, and RJ-45. The LC connector segment accounted for a major share of the market during the forecast period. The LC connectors are used for making fast connections in high-density applications. LC connectors are a reduced form of SC fiber connectors that are primarily used as BTW (behind-the-wall) connectors in central offices, LAN, and patch cords for premise distribution systems.

Application Segment Analysis

Based on application, the market is classified as telecommunication and data center. The data center segment is estimated to hold a significant market share during the forecast period. This market growth is due to factors such as the transformation to cloud storage and increasing technological developments such as machine learning, artificial intelligence, and deep learning, which, in turn, increase data traffic across networks, creating a demand for high data rate transceivers for efficient data communication.

The growth of hyper scale data centers also drives the demand for high data rate optical transceivers, such as 100G, 200G, 400G, and 800G, for channeling massive packets of information across shorter distances. Leading cloud service providers, including Google, Amazon, and Microsoft, are putting high data rate transceivers in their data centers. With the anticipated increase in the number of OTT platforms such as Netflix, HBO, Disney, and Amazon Prime, the number of data centers and reliance on them is expected to increase significantly, potentially fostering the data center market segment.

Regional Analysis

On the basis of region, the optical transceiver market share is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. Asia Pacific is projected to hold a prominent market share in the optical transceiver market during the forecast period. Increasing investment in 4G and 5G networks by telecommunication companies such as China Broadcast Network (China), Rakuten (Japan), and Dito Telecom (Philippines) is driving the market in the region. The demand for information interaction and data processing is growing due to the increasing development of IoT (Internet of Things), AI, and 5G.

• For Instance, In July 2021, Furukawa Electric Co. Ltd collaborated with Fujitsu Optical Components Limited to develop next-generation integrated devices. Furukawa Electric and FOC plan to build advanced-performing devices for next-generation communication networks by advancing technology to answer to the enormous growth in communications traffic and demand for lower power consumption.

The market in North America is expected to grow at a steady rate in the projected timeline due to the presence of firms such as II-VI, Lumentum, Broadcom, Mellanox, NeoPhotonics, Reflex Photonics, Cisco, and Ciena. These firms address the growing demand for specialized optical transceiver modules such as coherent pluggable modules, bidirectional (BiDi) modules, and quad small form-factor pluggable modules with a distance range of over 2000 m, and ultra-high-speed 800G optical transceiver modules for telecommunication, data center, and enterprise applications.

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Segments

Form Factor

• SFF
• SFP
• QSFP
• CFP
• SFP+ and SFP28
• XFP
• CXP

Data Rate

• Less than 10 Gbps
• 10 Gbps to 40 Gbps
• 41 Gbps to 100 Gbps
• More than 100 Gbps

Fiber Type

• Single-Mode Fiber
• Multimode Fiber

Wavelength

• 850 nm Band
• 1310 nm Band
• 1550nm Band
• Others

Connector

• LC Connector
• SC Connector
• MPO Connector
• RJ-45

Application

• Telecommunication
• Data Center

Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East & Africa

Key Players

• Accelink Technology Co. Ltd
• ALE International, ALE USA Inc.
• IKANO COMMUNICATIONS
• Cisco Systems, Inc.
• Hon Hai Precision Industry Co., Ltd.
• Polysys
• PCRL photonics.ntua.gr
• ROHM CO., LTD.
• Sumitomo Corporation
• Qorvo, Inc
• Photon-X
• Lumentum Operations LLC
• Broadcom.
• 3SP TECHNOLOGIES S.A.S.
• EMCORE Corporation.
• Huawei Technologies Co., Ltd.
• FluxLight Incorporated
• Others

Competitive Landscape

The key players operating in the optical transceiver market share include Accelink Technology Co. Ltd; ALE International, ALE USA Inc.; IKANO COMMUNICATIONS; Cisco Systems, Inc.; Hon Hai Precision Industry Co., Ltd.; Polysys; PCRL photonics.ntua.gr; ROHM CO., LTD.; Sumitomo Corporation; Qorvo, Inc; Photon-X; Lumentum Operations LLC; Broadcom.; 3SP TECHNOLOGIES S.A.S.; EMCORE Corporation.; Huawei Technologies Co., Ltd.; FluxLight Incorporated; and Others.

These companies adopt strategies including collaboration, mergers, acquisitions, product launches, partnerships, and production expansion to increase their consumer base. For instance,

• On March 10, 2023, We Energies, a Wisconsin-based utility company and Hon Hai Technology Group announced to launch of a solar project in Racine County. We Energies will install maintain and own around 2000 solar panels on the Foxconn panels. The contract focuses on utilizing single axis tracking and fixed tilt panels to boost renewable energy production efficiency.
   
• On August 22, 2022, Broadcom Inc. and Tencent Holdings Ltd. announced a strategic partnership to boost the adoption of high bandwidth co-packaged optics (CPO) network switches for cloud infrastructure. Broadcom will bring the 25.6-Tbps Humboldt CPO switch device with Broadcom’s best-in-class StrataXGS Tomahawk 4 switch chips features directly coupled and co-packaged with four 3.2-Tbps Silicon Photonics Chiplets In Package (SCIP) optical engines under the partnership.
   
• On March 9, 2022, Lumentum started a collaboration with Ayar Labs Inc., a prominent chip-to-chip optical connectivity provider, to deliver continuous-wave wavelength division multiplexing multi-source agreement. Co-packaged optics is a new market opportunity in the industry. Lumentum is well-positioned to capture this opportunity with the transition from traditional copper interconnects to co-packaged optics.

• On November 16, 2020, NTT Communications, a prominent player in Japan installed a single-wave 800G line speed solution for data center interconnect (DCI), enabling Japan's first 800G ultra-high-capacity network for DCI. With an 800G solution, network operators, service providers, and content providers transport more data per wavelength installed or extend wavelengths over greater distances without requiring regeneration. In comparison to 200G and 400G Ethernet, 800G is a newer technology. However, as the demand for higher bandwidth networking equipment and connections in cloud growth and hyper-scale data centers rises, 800G optical modules and transmissions are unavoidable trends in the next 3 to 5 years.