OPTICAL TRANSCEIVER MARKET ANALYSIS

The global optical transceiver market size was valued at US$ 10.05 Billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 12.2% from 2023 to 2030. The global optical transceiver market is expected to show significant growth in the coming future. It is driven by growing demand for high-speed data transmission, expansion of network infrastructure, increasing adoption of smart devices, and the deployment of 5G technology in various regions across the globe.

Global Optical Transceiver Market: Regional Insights

North America among regions is expected to gain strong share in the global optical transceiver market over the forecast period. This can be owing to rise growth of communication landscape, and the massive penetration of internet. These trends are driving the demand for improved connectivity, which further fuels the demand for optical transceivers in the region. Moreover, significant investment in network infrastructure transformation in the region, as firms across the globe adapting to a post-pandemic future, is also expected to support growth of the market in the region.

Furthermore, Asia Pacific is projected to show substantial growth in the global optical transceiver market over the forecast period, owing to constantly advancing communication technologies in the region. Telecom network operators in this regions are installing fiber for the full range of telecom applications, which also includes intra-city, inter-city, mobile cellular, and FTTx systems. This is further driving the demand for optical transceivers, which is likely to boost growth of the global optical transceiver market during the forecast period.

Figure 1. Global Optical Transceiver Market Share (%), By Region, 2022

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Global Optical Transceiver Market Drivers:

Rise in need for advanced communication to fuel the market pace

The bearer network are advancing and upgrading, which is likely to create demand for optical communication network equipment for increasing as 5G technology is progressing and base stations are being deployed. As per the Ericsson’s mobility report, the LTE networks and fixed broadband subscription penetration has increased rapidly from 2019, and this trend is likely to continue in the near future.  As per the report, by 2024, the fixed broadband connection is anticipated to grow by 3% year on year growth. This is in turn expected to augment growth of the global optical transceiver market over the forecast period.

Growing demand for cloud-based services to boost the market growth

There is a significant increase in data center traffic in recent years due to booming cloud applications such as machine learning (ML), artificial intelligence (AI), virtual reality (VR), and augmented reality (AR) and Ethernet turning to 400GE/800GE era. Cloud data centers are focusing on improving interconnect bandwidth, due to which the demand for optical transceivers is growing. Cloud data centers are known to be the basis of infrastructure of cloud computing network. Due to the growth of cloud computing sector, the number data centers around the world has increased significantly. These massive cloud data centers are further boosting the need for optical transceivers. This is thus expected to propel growth of the global optical transceiver market during the forecast period.

Global Optical Transceiver Market Opportunities:

Ever growing demand for digital services is likely to bring several growth opportunities in the global optical transceiver market during the forecast period. Data communications is now a major factor of advanced civilization. Optical fiber networks have proven to be promising in transmitting data over global distances and deliver at an enormous scale in order to cater the constantly growing demand for digital services around the world. The constant demand for data, along with deployment of 5G, requires development of ultra-wide bandwidth optical amplifiers, modulators, as well as optical fibers. Thus, this in turn is likely to be a lucrative opportunity for market players in the coming years.

Growing innovations are also expected to offer multiple growth opportunities in the global optical transceiver market during the forecast period. Innovations such as photonic integrated circuits (PICs) are driving the demand for optical transceivers. PICs consists numerous optical functions only on one chip of few millimeters square. These integrated devices are important for operating the current cloud-based internet activities. This in turn creates strong demand for optical transceivers. Thus, the market is likely to witness various growth opportunities in during the forecast period.

Global Optical Transceiver Market Trends:

Substantial demand for 400G and 200 GbE transceivers is a major trend

s400G transceivers, and Amazon began in 2020. This further massively impacted the market. Whereas, Meta started deployment of 200G from 2021. With the first sales of 2x400G transceivers to Google also benefited the market growth during this period. This trend is likely to continue in the market over the forecast period.

Rapidly growing Big Data and Cloud Computing applications is a growing trend

With increasing growth big data and cloud computing applications, data centers are handling significant amount of traffic. In order to cater the growing demand for high-bandwidth data transmission and maintaining the same power consumption, size of data center, and cost, increasing optical transceiver speeds has become critical. Market players are addressing this challenge with silicon-photonic technology, as it reduced the size of transceivers and simplifies the design and production by integration of number optical components onto a single silicon photonic chip. This is further driving the demand for optical transceivers, which is likely to support growth of the market in coming years.

Global Optical Transceiver Market Restraints:

Growing complexity of networks to impede the market growth

Optical transceivers are commonly utilized with laser diodes and signal decoders. The operation of the transceivers depends on optical pulses that are generated by laser diodes and electric signals that signal decoder processes between the receiver and transmitter. Fiber optic devices and lines are compatible with this process; however, several data centers possess copper-based networking devices, which are not compatible with fiber optic transmission. This in turn increases complexity of networks, which is further likely to hinder growth of the global optical transceiver market over the forecast period.

Adverse situations resulting from COVID-19 pandemic to obstruct the market growth

The COVID-19 pandemic affected many countries around the world, following which several countries imposed stringent regulations. Due to disrupted semiconductor supply chain and restriction on international imports, the hardware manufacturers faced production constraints. Furthermore, several vendors witnessed negative impact of the pandemic in terms of declined revenue. Thus, such adverse situations arising due to the pandemic are expected to hinder growth of the global optical transceiver market during the forecast period. However, the market is likely to regain growth, as the pandemic situation goes back to normal.

Figure 2. Global Supercomputers Market Share (%), By Protocol, 2022

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Global Optical Transceiver Market Segmentation:

The global optical transceiver market report is segmented into Protocol, Data Rate, and Application.

Based on Protocol, the market is segmented into Ethernet, Fiber Channel, CWDM/DWDM, FTTx, and Other Protocols. Out of which, Ethernet is expected to witness significant growth in the global market over the forecast period and this is attributed to the growing demand for Ethernet protocol due to various benefits. Ethernet is the standard to connect devices in a wide area network (WAN) or wired local area network (LAN). With Ethernet devices can communicate with one another through a protocol. Thus, growing demand for Ethernet is likely to drive the market growth.

Fiber Channel segment is also expected to dominate in the global market over the forecast period and this is owing to the continuous adoption of fiber channel across various industries. Fiber channel is a high-speed data transport protocol delivering raw block data without loss. This technology is commonly utilized in switched fabric environments, however, also enables two devices to connect physically.  Thus, growing adoption of fiber channel is likely to support growth of the segment.

Based on Data Rate, the market is segmented into Less than 10 Gbps, 10 Gbps to 40 Gbps, 100 Gbps, and Greater than 100 Gbps. Out of which, Less than 10 Gbps is expected to dominate the global market over the forecast period and this is attributed to widespread use of less than 10 Gbps data rate. Moreover, strong vendor offering is driving the demand in the segment. For instance, Optokon offers the S155 series of bidirectional, duplex, and CWDM transceiver modules pluggable 3.3 V small-form-factor transceiver modules. These are designed specifically for high speed communications needing rates of up to 155 Mbps.

10 Gbps to 40 Gbps segment is also expected to witness significant growth in the near future and this is owing to the rise in demand for 10-40 Gbps applications and developments such as product innovations, collaborations and others. The segment is likely to witness strong growth in the coming future.

Based on Application, the market is segmented into Data Center, and Telecommunication. Out of which, Data Centers is expected to dominate the global market over the forecast period and this is attributed to the growing emergence of data centers across the world, and expansion of technologies such as high-performance computing, and AI, which requires to connect data center assets in reliable, fast, and cost-effective manner. These factors are driving growth of the segment.

Telecommunications segment is also expected to witness significant growth in the near future and this is owing to the rise in demand for internet and connectivity access among the increasing metropolitan cities. The telecommunication industry is growing rapidly with the need for higher internet speed and better connectivity, which needs efficient and strong optic test equipment. Thus, the segment is likely to show major growth in the near future.

Global Optical Transceiver Market: Key Developments

In November 2021, Lumentum Operations LLC acquired NeoPhotonics, a leading provider of developer and manufacturer of optoelectronic and laser solutions for US$ 16.00 per share in cash representing a total equity value of nearly US$ 918 million.

In March 2022, Fujitsu Optical Components Ltd., announced the development of CFP2-DCO coherent transceiver for 400Gbps DWDM open systems and began the expansion of sales in the second half of 2021.

In February 2022, Smiths Interconnect introduced its LightCONEX optical plug-in and backplane module connectors. This is likely to be a revolutionary solution for VPX systems incorporating an optical transceiver into the plug-in module connector.

In June 2021, Broadcom Inc., launched its expanded portfolio of 100Gb, 200Gb, 400Gb, and 800Gb electro-optics platform solutions for cloud networks and data center. This portfolio is designed for providing consumers with a complete set of solutions in order to cater the rising demands for networking bandwidth in industries.

Global Optical Transceiver Market: Key Companies Insights

The global optical transceiver market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis.

Some of the key players in the global optical transceiver market are HUBER+SUHNER Cube Optics AG,  II-VI Incorporated, Broadcom Inc., Accelink Technologies, Huawei Technologies Co. Ltd., Lumentum Operations LLC (Lumentum Holdings), Source Photonics (Redwood Capital), Sumitomo Electric Industries Ltd., Reflex Photonics Inc., and Fujitsu Optical Components Limited

*Definition: Optical Transceiver (or OT) is an optical device that converts electrical data signals from a computer or switch into laser wavelength specific signals, and then transports these signals over optical fiber. They also contain a number of other functions, including optical power control, modulation transmission, signal detection, IV conversion, limiting amplifier decision regeneration and more.