Driven by the construction of 5G base stations, cloud computing, and large-scale data centers in recent years, the market size of optical modules has increased accordingly. Although the optical module industry is developing rapidly at this stage and gradually becoming mature, from the perspective of the entire industry chain, its upstream optical components and chips still rely heavily on foreign imports. Therefore, in the future, domestic companies will need to improve the performance and performance of optical modules. In addition to production capacity, more capital and energy need to be invested in the development of domestic optical devices and chips. In this article, ETU-LINK will talk about why the market for optical modules will increase.

According to data, the average R&D investment of domestic optical module manufacturers in the past ten years accounted for more than 7% of operating income. Although this is slightly lower than that of manufacturers such as Huawei, ZTE, and FiberHome, from a global perspective, this investment is still relatively large. High, because EU countries’ R&D investment is only 2.5%.

China has the world's largest optical communications market and excellent equipment vendors such as Huawei and ZTE, which provides fertile soil for the growth of optical module manufacturers. Taking the telecommunications market in 2016 as an example, the number of optical components in the FTTx, mobile fronthaul and backhaul markets exceeded 115 million U.S. dollars, and sales revenue reached 1.7 billion U.S. dollars, 70% of which were deployed in China; in addition, Huawei, ZTE, and Fiberhome accounted for 24.6 %, 13.5%, and 6.5% are ranked first, second, and fifth in the global optical network equipment market, accounting for more than half.

The main application scenarios of optical modules are the telecommunications market and the data center market. The telecommunications market is mainly used in base station/PON/WDM/OTN/switches/routers, and the data center market is mainly used in servers/top of rack switches/core switches/core routers. And other equipment. It can be seen that the huge application market provides good development conditions for optical module manufacturers. In the 5G communication market, the 5G base station network will evolve from the two-level structure of BBU and RRU of 4G/LTE to the three-level structure of CU, DU and AAU. There are three reasons for the outbreak of the 5G-driven optical module market: one is that some of the fronthaul optical modules are all upgraded and replaced with 25G/40G optical modules; the second is to add mid-transmission scenarios, adding 50G/100G mid-transmission optical modules; third is to return The transmission rate of the optical module is upgraded to 100G/200G/400G.

At present, the pace of 5G construction is accelerating, and the 5G fronthaul access network requires a large number of optical modules. In 2019, the 10G and 25G fronthaul modules purchased by the three major operators reached the order of one million. As of August 2020, there will be about 1.8 million 25G CWDM modules in demand. It is predicted that the demand for 5G optical modules is expected to reach tens of millions this year, which is a huge piece of good news for the entire optical transceiver industry.