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Research Institute: Driven by Chinese suppliers and energy-saving technologies, the global optical transceiver market will double by 2028
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Author : JIUZHOU
Update time : 2023-08-11 11:28:57
The research institute predicts that by 2028, the global optical transceiver market revenue will reach US$22.2 billion, with a compound annual growth rate (CAGR) of 12% from 2022 to 2028. Generative artificial intelligence will drive the expansion of data center infrastructure, Chinese suppliers will become dominant, and energy-efficient technologies will drive market growth.
In 2022, the revenue generated by the global optical transceiver market will increase by 12.5% annually to US$11 billion. Driven by high demand for 800G high data rate modules from large cloud service operators and national telecoms' requirements for increased fiber network capacity, the research firm expects the global optical transceiver market revenue to reach USD 22.2 billion by 2028, up from 2022 The compound annual growth rate (CAGR) between 2028 and 2028 is 12%.
Generative AI will drive data center infrastructure expansion
Led by technology, the use of artificial intelligence is gaining momentum and driving the demand for data centers. As technology integrators apply Generative AI more deeply to everyday applications, the demand for computing power in data centers will continue to escalate. The server computer density required for AI also generates a lot of heat, challenging energy efficiency and sustainability. While artificial intelligence is the main factor driving data center demand, other applications such as ultra-high-definition (UHD) video and various augmented reality/virtual reality (AR/VR) applications, as well as cloud services such as social networking, business conferencing, UHD video streaming, e-commerce and gaming), will also continue to drive growth in data center demand.
In 2022, the revenue generated by the global optical transceiver market will increase by 12.5% annually to US$11 billion. Driven by high demand for 800G high data rate modules from large cloud service operators and national telecoms' requirements for increased fiber optic network capacity, the research firm expects the global optical transceiver market revenue to reach USD 22.2 billion by 2028 and 2022 The compound annual growth rate (CAGR) between 2028 and 2028 is 12%.
Research institutions predict that the global optical transceiver market revenue will decline slightly in 2023, mainly due to the slowdown in the growth rate of hyperscale capital expenditure (Hyperscale CAPEX). In 2023, the overall data center capital expenditure of hyperscalers will drop significantly. On the other hand, telecom capital expenditure (Telecom CAPEX) will decline by 3% per year in the next three years. However, year-over-year growth in wired and wireless telecom equipment may only be 1% in 2023. One of the reasons for the slow growth in data center hyperscale capex is the closure of the Metaverse and its negative impact. Actions taken by Meta and other affected industries will lead to a slowdown in optical transceiver deployment in 2023.
Under the impetus of artificial intelligence, China's status is gradually highlighted
The global optical transceiver industry is highly competitive. Players range from large international companies offering a wide range of products to smaller companies specializing in narrow markets. Key competencies in the optical transceiver market include the ability to provide leading technologies for high-speed communications, the ability to design and manufacture high-quality and reliable products, and customized solutions. Optical transceiver providers can use different technologies and approaches to overcome physical limitations to achieve higher data rates. It can be clearly seen that these two strategies (one based on InP and the other based on a silicon photonics platform) will co-exist in the coming years. Competitive players are associated with both platforms.
In the process of constantly catching up and accelerating development, China's position in the optical communication industry has become increasingly prominent. Today, the core optical technology for high-speed modules is the domain of US and Japanese manufacturers, but China has invested heavily in photonic manufacturing platforms such as gallium arsenide (GaAs), indium phosphide (InP) and silicon photonics (SiPh). The Chinese government's "China Optoelectronic Device Industry Technology Development Roadmap (2018-2022)" defines a national strategy to increase the market share of local optical chip manufacturers.
NVIDIA's latest AI-driven system designs will require 800G pluggable optics for its upcoming AI/ML hardware. They are investing in linear non-retiming technology to alleviate the constraints of interconnect power, power density, and latency that come with AI scaling. China's top optical suppliers are actively moving towards the forefront of suppliers. They have tripled or quadrupled in value on the stock market in the past few months.
It's time for a new design with new materials
Silicon photonics is a versatile platform that can host a variety of photonic components such as modulators, photodetectors (PDs), splitters, (de)multiplexers, and filters, unlike more mature ones such as InP and GaAs. Compared with III-V materials, it is limited in laser sources. In recent years, the integration of various materials has opened additional avenues for high-performance SiPh modulators. Introduce other materials on the silicon platform, such as TFLN (thin film LiNbO3), BTO (BaTiO3), plasmonic organic hybrid (POH) or graphene, etc. Its power, performance (speed, drive voltage) and footprint are limited.
The power consumption of high-speed optical interconnects is the main limiting factor for optical links in data centers. The largest power consumption comes from the electrical interface SerDes, digital signal processor (DSP) and additional retimer (CDR) between switching ASIC and optical module, especially in pluggable packages. Co-packaged optics (CPO) is a new approach to tightly integrate optics and switching ASICs to overcome the above-mentioned challenges. However, a CPO must grow to meet all industry requirements. Another potential industry alternative to co-packaged optics is the linear driver pluggable optics (LPO) that remain on the front panel of the switch. Reducing latency is a critical improvement in applications such as switch-to-switch, switch-to-server, and GPU-to-GPU connections in machine learning (ML) and high-performance computing (HPC).
In 2022, the revenue generated by the global optical transceiver market will increase by 12.5% annually to US$11 billion. Driven by high demand for 800G high data rate modules from large cloud service operators and national telecoms' requirements for increased fiber network capacity, the research firm expects the global optical transceiver market revenue to reach USD 22.2 billion by 2028, up from 2022 The compound annual growth rate (CAGR) between 2028 and 2028 is 12%.
Generative AI will drive data center infrastructure expansion
Led by technology, the use of artificial intelligence is gaining momentum and driving the demand for data centers. As technology integrators apply Generative AI more deeply to everyday applications, the demand for computing power in data centers will continue to escalate. The server computer density required for AI also generates a lot of heat, challenging energy efficiency and sustainability. While artificial intelligence is the main factor driving data center demand, other applications such as ultra-high-definition (UHD) video and various augmented reality/virtual reality (AR/VR) applications, as well as cloud services such as social networking, business conferencing, UHD video streaming, e-commerce and gaming), will also continue to drive growth in data center demand.
In 2022, the revenue generated by the global optical transceiver market will increase by 12.5% annually to US$11 billion. Driven by high demand for 800G high data rate modules from large cloud service operators and national telecoms' requirements for increased fiber optic network capacity, the research firm expects the global optical transceiver market revenue to reach USD 22.2 billion by 2028 and 2022 The compound annual growth rate (CAGR) between 2028 and 2028 is 12%.
Research institutions predict that the global optical transceiver market revenue will decline slightly in 2023, mainly due to the slowdown in the growth rate of hyperscale capital expenditure (Hyperscale CAPEX). In 2023, the overall data center capital expenditure of hyperscalers will drop significantly. On the other hand, telecom capital expenditure (Telecom CAPEX) will decline by 3% per year in the next three years. However, year-over-year growth in wired and wireless telecom equipment may only be 1% in 2023. One of the reasons for the slow growth in data center hyperscale capex is the closure of the Metaverse and its negative impact. Actions taken by Meta and other affected industries will lead to a slowdown in optical transceiver deployment in 2023.
Under the impetus of artificial intelligence, China's status is gradually highlighted
The global optical transceiver industry is highly competitive. Players range from large international companies offering a wide range of products to smaller companies specializing in narrow markets. Key competencies in the optical transceiver market include the ability to provide leading technologies for high-speed communications, the ability to design and manufacture high-quality and reliable products, and customized solutions. Optical transceiver providers can use different technologies and approaches to overcome physical limitations to achieve higher data rates. It can be clearly seen that these two strategies (one based on InP and the other based on a silicon photonics platform) will co-exist in the coming years. Competitive players are associated with both platforms.
In the process of constantly catching up and accelerating development, China's position in the optical communication industry has become increasingly prominent. Today, the core optical technology for high-speed modules is the domain of US and Japanese manufacturers, but China has invested heavily in photonic manufacturing platforms such as gallium arsenide (GaAs), indium phosphide (InP) and silicon photonics (SiPh). The Chinese government's "China Optoelectronic Device Industry Technology Development Roadmap (2018-2022)" defines a national strategy to increase the market share of local optical chip manufacturers.
NVIDIA's latest AI-driven system designs will require 800G pluggable optics for its upcoming AI/ML hardware. They are investing in linear non-retiming technology to alleviate the constraints of interconnect power, power density, and latency that come with AI scaling. China's top optical suppliers are actively moving towards the forefront of suppliers. They have tripled or quadrupled in value on the stock market in the past few months.
It's time for a new design with new materials
Silicon photonics is a versatile platform that can host a variety of photonic components such as modulators, photodetectors (PDs), splitters, (de)multiplexers, and filters, unlike more mature ones such as InP and GaAs. Compared with III-V materials, it is limited in laser sources. In recent years, the integration of various materials has opened additional avenues for high-performance SiPh modulators. Introduce other materials on the silicon platform, such as TFLN (thin film LiNbO3), BTO (BaTiO3), plasmonic organic hybrid (POH) or graphene, etc. Its power, performance (speed, drive voltage) and footprint are limited.
The power consumption of high-speed optical interconnects is the main limiting factor for optical links in data centers. The largest power consumption comes from the electrical interface SerDes, digital signal processor (DSP) and additional retimer (CDR) between switching ASIC and optical module, especially in pluggable packages. Co-packaged optics (CPO) is a new approach to tightly integrate optics and switching ASICs to overcome the above-mentioned challenges. However, a CPO must grow to meet all industry requirements. Another potential industry alternative to co-packaged optics is the linear driver pluggable optics (LPO) that remain on the front panel of the switch. Reducing latency is a critical improvement in applications such as switch-to-switch, switch-to-server, and GPU-to-GPU connections in machine learning (ML) and high-performance computing (HPC).
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