The Drivers And Opportunities For The Optical Transceiver Market
The optical transceiver market is expected to grow from USD 7.0 billion in 2021 to USD 14.3 billion by 2026, at a CAGR of 15.2% during the forecast period. The increase in internet data traffic and rising demand for smartphones and other smart gadgets are driving the growth of cloud-based services, hence increasing opportunities for the optical transceiver market. This is mainly due to the assured reliability cloud computing provides as compared to in-house servers. The advent of cloud computing has generated new business capabilities and opportunities for enterprises. With the help of cloud-based services such as software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS), small enterprises and consumers can subscribe to a range of services by replacing locally housed computing solutions.
XR optics are a new class of pluggable solutions that enable a single laser to be divided into independently routable data streams using Nyquist subcarriers, resulting in the industry's first point-to-multipoint coherent optical subcarrier aggregation technology optimized for hub-and-spoke traffic patterns. This enables network operators to create more efficient, flexible, and cost-effective transport networks that are optimized for the applications that drive network growth. In February 2020, Infinera (US) and Lumentum (US) announced a collaboration to bring XR optics-based networking solutions to market.
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XR optics enables significantly more efficient and
cost-effective solutions to the transport networking challenges that operators
face when delivering new 5G, enhanced broadband, and cloud-based business
services. XR optics, which incorporates the industry's first
point-to-multipoint coherent optical aggregation technology, is intended to
disrupt optical networking economics by enabling new transport architectures.
It is powered by Infinera's low-power DSP technology, which uses routable
Nyquist subcarriers to allow a single high-speed transceiver to send and
receive independent data streams to and from multiple low-speed transceivers.
All optical networks are mostly built on a foundation of bookended
point-to-point optical links. Many networks, particularly metro networks, have
point-to-multipoint traffic flow, with connectivity between a group of
lower-capacity sites and a smaller number of higher-capacity hub sites. XR
optics technology is specifically designed to address this asymmetry.
The data center application accounted for
the largest share of the market in 2020 and is expected to dominate the market
throughout the forecast period. This growth in the market is due to factors
such as transition toward cloud storage and increasing technological
developments, including machine learning, artificial intelligence, and deep
learning, which, in turn, increase the data traffic across networks, which
create demand for high data rate transceivers for efficient data communication.
The development of hyperscale data centers also drives the demand for high data
rate optical transceivers, such as 100G, 200G, 400G, and 800G, for channeling
huge packets of information in a shorter span. Moreover, the technological
initiatives by big telecommunication giants for the implementation of the 5G
networks in APAC regions is further expected to fuel the demand of optical
transceivers.
Optical transceivers supporting data rates of 41 Gbps to 100 Gbps are expected to grow at the highest CAGR during the forecast period. The rising demand for higher data transmission drives the growing demand for 100G, 200G, and 400G transceivers. With the advent of advanced technologies such as AI and 5G, there is an increased requirement for higher bandwidth, which is eventually necessary for data center applications. There has been an increase in internet penetration traffic owing to different factors such as high-bandwidth applications, enhanced data transfer capabilities, fast fixing broadband speeds, growing online video content, mobile internet users, and the proliferation of connected devices.
Furthermore,
the rising adoption of smart devices and IoT is responsible for the increasing
demand for high data rate-enabled optical transceivers along with the shift
toward cloud storage. These are some factors leading to the rise in demand for
high data rate transceivers for communicating the data efficiently. The higher adoption rate of smartphones, smart
devices (such as wearable devices, home assistant, IoT based home security
system, and gaming consoles), and laptops & desktops would present several growth
opportunities to players catering the optical transceivers operating within
data rate of 41 Gbps to 100 Gbps.
The optical transceiver market for
multimode fiber (MMF) to be faster-growing segment of optical transceivers during
the forecast period owing to benefits such as cost-efficiency, high speed,
bandwidth across shorter distances, larger fiber cores, and good alignment
tolerances, among others. The market for MMF type optical transceivers is
further projected to occupy ~52% of the market shares by 2026. The majority of
existing data center backbone cabling is multimode, as until such facilities
become a certain size, there is no constraint in terms of the amount of reach
needed. Hence, it is expected that MMF type will grow at a faster rate; thus expected to increase the scope for MMF type optical transceiver
market for the existing companies and new entrants.
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