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In a new report, the France-based research firm Yole Développement forecasts that revenues in the worldwide optical-transceiver market, estimated at around US$9.6 billion in 2020, could balloon to US$20.9 billion by 2026. That would represent a compound annual growth rate of some 14% for the period.
Data-driven demand
Yole attributes the blistering potential growth to the seemingly insatiable desire among consumers and businesses for new connected devices and services, and the consequent pressure for expansion of cloud-based/data-center infrastructure. Particularly important, says the firm, will be adoption at scale of high-data-rate (above 100G) modules by big cloud operators and telecom suppliers.
Of the overall market growth that Yole projects, a sizable majority will lie in revenues from the data communications segment, which the company believes will grow at a 19% compound annual clip, from US$5.3 billion in 2020 to US$15.1 billion in 2026. Over the same period, the company envisions transceiver revenues from the telecom segment expanding from US$4.3 billion to US$5.8 billion, for compound annual growth of only 5%.
Both data-center providers and telecom firms are, according to Yole, increasingly gravitating toward the “800-Gbps optical ecosystem” to keep up with burgeoning data requirements. The company observes, however, that moving beyond 800 Gbps will be difficult for existing equipment, for reasons related to thermal management, power consumption, and the need to pack higher electrical and optical densities onto current module form factors. Yole suggests that this will drive forward the development of co-packaged optics, a more integrated alternative to pluggable optics that may be able to overcome some of these challenges.
China connections
The company’s report, Optical Transceivers for Datacom & Telecom Market 2021, also sees considerable market significance in the deteriorating political and economic relations between the United States and China. The latter, Yole notes, not only represents “one of the largest markets and growth opportunities” for many laser and photonics suppliers, but occupies a central position in the global industrial supply chain for these components.
“It would be very difficult to break down the manufacturing chain into high-end devices that might present national security concerns and lower-end devices for which intellectual property sharing and joint ventures would remain permitted,” the firm writes. “Yet if the U.S. imposes new tariffs this decoupling may happen, and it will adversely affect the whole optical communication supply chain.”