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The optical interconnect market size is forecast to increase by USD 16.80 billion and is estimated to grow at a CAGR of 20.62% between 2023 and 2028. Cloud databases have gained significant traction in today's digital landscape, offering businesses scalability, flexibility, and cost savings. This shift towards cloud-based solutions has led to an increase in the number of data centers worldwide. Moreover, the demand for Long-Term Evolution (LTE) migration in telecommunications is fueling the growth of data centers, as they provide the necessary infrastructure to support the massive amounts of data generated by LTE networks. Cloud databases offer various advantages, including real-time data access, automatic scaling, and high availability. As businesses continue to generate and collect vast amounts of data, the need for reliable and efficient data management solutions, such as cloud databases and data centers, will only continue to grow.
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The market is witnessing significant growth due to the increasing demand for high-speed data transmission in various industries, including telecommunications networks, data centers, and IoT. Optical interconnect technologies, such as single mode and multimode fibers, are playing a crucial role in facilitating increased bandwidth for cloud computing, big data analytics, artificial intelligence, high-performance computing, and 5G services. The market is driven by the commercialization of these technologies in data centers, hyper-scale datacenters, and data center networks. Optical interconnects are essential for short-distance data transmissions in high-performance computing applications, requiring high-efficiency processing. The multimode fiber segment is expected to dominate the market due to its cost-effectiveness and ease of use in shorter distance applications. The single mode segment is gaining traction in long-haul telecommunications networks and data center interconnects. Alignment and packaging are critical factors in the market, ensuring efficient data transmission and reducing signal loss. The market is expected to continue its growth trajectory, driven by the increasing demand for data center infrastructure and the commercialization of driverless vehicles and other IoT applications. Overall, the market is poised for continued growth, fueled by the increasing demand for high-speed data transmission and the evolution of advanced technologies such as artificial intelligence and 5G services. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Adoption of cloud database is notably driving market growth. The Market is witnessing significant growth due to the increasing demand for efficient data communication in various sectors, including cloud service providers, large-scale datacenters, and hyperscale datacenters. With the advent of AI, 5G, and the Internet of Things (IoT), the bandwidth requirements for networks have surged. High-performance optical interconnects are essential to handle the massive data traffic generated by deep learning, data analytics, and smart applications such as driverless vehicles, wireless communication, and smart gaming.
Moreover, optical interconnects offer higher bandwidth and lower latency compared to traditional copper cables. They are crucial for the commercialization of 5G services and the alignment and packaging of datacenter components. The increasing adoption of fiber mode in datacenter networks is expected to boost the market growth. Furthermore, the integration of AI and machine learning algorithms in datacenter operations is anticipated to enhance the efficiency of data communication. Thus, such factors are driving the growth of the market during the forecast period.
Demand for millimeter wave connectivity is the key trend in the market. The market is witnessing significant growth due to the increasing demand for efficient data communication in large-scale datacenters and cloud service providers. With the commercialization of AI, 5G services, and the Internet of Things, the bandwidth requirements for data centers and networks are escalating.
Moreover, optical interconnect plays a crucial role in connecting hyperscale datacenters and enabling high-speed data transmission. In particular, the adoption of 5G networks is driving the need for optical interconnect components to manage the massive wireless backhaul traffic. This traffic can be categorized into small cell and millimeter wave network architectures. Furthermore, applications such as data analytics, driverless vehicles, smart gaming, and cloud storage are fueling the demand for high bandwidth solutions. Thus, such trends will shape the growth of the market during the forecast period.
High cost of optical interconnectors is the major challenge that affects the growth of the market. The market is experiencing significant growth due to the increasing demand for efficient data communication in various industries, including cloud service providers, large-scale datacenters, and hyperscale datacenters. With the advent of AI, 5G, and the Internet of Things (IoT), the bandwidth requirements for networks have surged, leading to a higher demand for high-bandwidth interconnectors. These interconnectors are essential for supporting data traffic in applications such as cloud storage, deep learning, data analytics, and smart gaming.
Moreover, optical interconnects are crucial for 5G services and wireless communication in driverless vehicles. The high bandwidth and low-latency capabilities of these interconnectors make them indispensable for hyper scale datacenters and data center networks. The alignment and packaging of these interconnectors are critical for maintaining their efficiency and reliability. The average selling price (ASP) of optical interconnectors varies depending on the number of applications, package weight, bandwidth, split ratios available, custom wavelength, coupling ratio, sample rate, and several channels. Hence, the above factors will impede the growth of the market during the forecast period
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Cisco Systems Inc: The company offers optical interconnect products such as 400G modules, 100G modules and 40G modules.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The single-mode fiber segment is estimated to witness significant growth during the forecast period. The market is witnessing significant growth due to the increasing adoption of cloud computing, big data analytics, artificial intelligence, and high-performance computing in various industries. Optical interconnect technologies, including single-mode and multi-mode fibers, play a crucial role in these applications by providing compatibility, interoperability, and high performance.
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The single-mode fiber segment was the largest segment and valued at USD 6.29 billion in 2018. Single-mode fibers, with a core diameter of about 8-9 µm and cladding diameter of about 125 µm, offer less noise resistance and are suitable for long-distance data transmissions, up to 10 km. They are widely used in data centers, telecommunications networks, and high-performance computing applications that require increased bandwidth and high-efficiency processing. Moreover, the advent of 5G service and 5G networks is expected to further boost the market growth during the forecast period.
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APAC is estimated to contribute 62% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market is experiencing significant growth due to the increasing demand for high-speed data transmission in cloud computing, big data analytics, artificial intelligence, and high-performance computing applications. Data centers are at the core of these technologies, necessitating advanced optical interconnect solutions for interconnection and network infrastructure. Optical interconnect technologies, including single mode fiber and multi-mode fiber, offer compatibility and interoperability advantages over copper-based interconnects, making them ideal for next-generation applications and services. The advent of 5G service and telecommunications networks is further fueling the market growth during the forecast period.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion " for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
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The market is witnessing significant growth due to the increasing adoption of cloud computing, big data analytics, artificial intelligence, and high-performance computing in various industries. Data centers, telecommunications networks, and next-generation applications & services are major end-users of optical interconnect solutions. Optical interconnect technologies, including single mode fiber and multi-mode fiber, play a crucial role in enabling high-speed data communication and real-time data processing. The market landscape depends on the high data transmission rate, data centers networks, driverless vehicle, data centre budget allocations, data centre, commercialisation, datacenter companies. Optical interconnect solutions are essential for 5G service deployment and network interconnection, providing compatibility and interoperability for ML/AI networks, edge computing, and data-intensive technologies.
Moreover, the data communication segment is the largest market for optical interconnects, driven by increased bandwidth requirements and short-distance data transmissions. Semiconductor companies and infrastructure software solutions providers are investing heavily in the development of optical engines and networking solutions to meet the demands of high-performance computing applications and IoT devices. The single mode fiber segment is expected to dominate the market due to its higher bandwidth capacity and longer transmission distances, while the multi-mode fiber segment is preferred for short-distance data transmissions. Optical interconnect technologies are essential for 5G networks, enabling high-efficiency processing and real-time data transfer. The adoption of these technologies is expected to continue to grow as the demand for real-time data processing and high-speed data communication increases.
Market Scope |
|
Report Coverage |
Details |
Page number |
190 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 20.62% |
Market growth 2024-2028 |
USD 16.80 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
16.56 |
Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
Performing market contribution |
APAC at 62% |
Key countries |
China, US, South Korea, Japan, and Canada |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
3M Co., Amphenol Corp., Cisco Systems Inc., Corning Inc., FIBERONE LLC, Fischer Connectors Holding SA, Fujikura Ltd., Fujitsu Ltd., Furukawa Electric Co. Ltd., II VI Inc., InnoLight Technology Ltd., Japan Aviation Electronics Industry Ltd., Lumentum Holdings Inc., Molex LLC, NINGBO LONGXING TELECOMMUNICATIONS EQUIPMENT MANUFACTURING CO. LT, NVIDIA Corp., Radiall SA, Sterlite Technologies Ltd., Sumitomo Electric Industries Ltd., and TE Connectivity Ltd. |
Market dynamics |
Parent market analysis, market report, market forecast, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Fiber Type
7 Market Segmentation by Connectivity
8 Market Segmentation by Product Type
9 Customer Landscape
10 Geographic Landscape
11 Drivers, Challenges, and Opportunity/Restraints
12 Competitive Landscape
13 Competitive Analysis
14 Appendix
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