Recently, market research firm YOLE Group stated in its latest market report that the AI-driven optical module market will see a 45% year-on-year growth. The AI-driven optical transceiver market in data communications is expected to witness a whopping 45% year-on-year growth through 2024, demonstrating strong market dynamics and promising growth prospects.

The revenue of the optical transceiver market declined slightly to $10.9 billion from $11 billion in 2022, but this is a temporary adjustment. As technology continues to advance and market demand continues to grow, the optical module market will rebound quickly and usher in a new growth spurt. According to YOLE Group, the optical transceiver market is expected to reach a total revenue of $22.4 billion by 2029, showing strong growth momentum.

These cutting-edge technologies have greatly contributed to the widespread deployment and adoption of high-speed optical technologies with their low power consumption and scalability. The growing demand for high-speed and efficient data transmission with the continuous development of technologies such as cloud computing, big data, and the Internet of Things (IoT) has provided the optical module market with tremendous growth opportunities.

However, from March 2023, demand for 800G modules surged, driven by hyperscale customers, leading to a significant increase in orders and shipments.Later in 2023, some organizations also increased their demand for 400G modules, reflecting the growing AI-driven market. Vendors have prepared for this growth by increasing capacity and securing raw materials, thereby positioning themselves for significant revenue growth in the 800G and 400G segments.

Revenues in the optical transceiver market declined slightly, from $11 billion in 2022 to $10.9 billion in 2023, but are expected to reach $22.4 billion by 2029, driven by high demand from cloud service operators and national telecom carriers for high-data-rate modules above 400G. Revenue growth is expected to reach 27% in 2024 due to large AI infrastructure orders and data center network upgrades to 800G.

Demand for 400G and 800G datacom transceiver modules is significantly driving revenue growth. The industry is shifting from 100Gb/s per channel to 200Gb/s per channel for 800G links to reduce power consumption and cost.EML and CW-DFB devices are ready for 200G/channel applications, while 200G/wavelength VCSELs are expected to be in volume production by 2026.

Integrated photonics promises to provide low-cost, scalable optical solutions in communications. Silicon photonics (SiPh) is coming into its own as optical links move to higher speeds and shorter distances. Utilizing CMOS technology, SiPh offers the advantages of high performance, low cost, high yield and volume manufacturing. Although SiPh can host a variety of photonic components, its laser source has certain limitations compared to III-V materials such as InP and GaAs.

An alternative to co-packaged optics (CPO) is linear drive pluggable optics (LPO), which has no DSP or CDR, resulting in lower power consumption and latency. This is critical for switch-to-switch, switch-to-server, and GPU-to-GPU connectivity in machine learning (ML) and high-performance computing (HPC).LPOs can be used in both multimode (VCSEL) and single-mode (EML, SiPh) applications but are best suited for use in conjunction with linear modulators such as TFLN (thin-film lithium niobate), BTO (barium titanate), and organics.LPOs s technology ecosystem is ready to integrate 100G SerDes into the latest network switch chips. At OFC 2024, discussions focused on Linear Receive Optics (LRO) for 1600G (8x200G) applications, a technology that improves performance, manufacturing margins and robustness.

This is the end of this issue of industry news! ETU-LINK is committed to providing customers with high-quality, high-performance optical module products so that they can better respond to the ever-changing market demands.

Source: YG PRESS NEWS - AI-driven optical transceiver market: towards the Belle Epoque? (yolegroup.com)