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The optical transceiver market size is forecast to increase by USD 10.31 billion at a CAGR of 16.68% between 2023 and 2028. The market is experiencing significant expansion, driven by several key factors. Strategic collaborations among supply chain members foster efficiency and innovation, enhancing market competitiveness. The proliferation of optical fiber communication networks, characterized by increasing connections, underpins the market's growth. Additionally, the construction of data centers continues to escalate, fueling the demand for advanced optical transceivers to support high-speed data transfer and storage. These elements collectively contribute to the robust growth trajectory of the market.
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The market is witnessing unprecedented growth fueled by the rapid expansion of smart devices and connected devices. Leveraging 5G networks and cloud-based services, these transceivers ensure high-speed connectivity with minimal latency. They facilitate seamless transmission of data, both through electrical signals and light signals, enabling efficient optical communication. With increasing 5G adoption, demand for advanced connectivity ICs and network equipment is soaring. This surge is also driven by the rising popularity of VoIP and LTE, demanding higher data rates and superior transmitter and receiver capabilities.
Strategic collaboration among supply chain members is the key factor driving the growth of the market. The growing IoT market and increased enterprise data, video, and IP/Internet traffic are factors driving the need for higher bandwidth. As such, members of the supply chain have initiated strategic collaborations to develop and design common optical transceiver standards to meet the product needs of next-generation data centers. Moreover, multiple vendors across the world are entering MSAs for the design and development of products that are compatible with offerings from other vendors.
Some of the products that adhere to MSAs include optical transceivers (QSFP, SFP, SFP, XENPAK, and XFP), fiber optic cables, and other networking devices. Over the years, several vendors, including optical component manufacturers, have entered MSAs to support the development of fiber optic transceiver modules. Such alliances are anticipated to drive the adoption of these networks, which, in turn, will fuel the demand during the forecast period.
The migration of OTNs toward WDM architecture is the primary trend in the market. OTNs have started migrating from SONET technology toward wavelength-division multiplexing (WDM) architecture, more prominently to dense WDM (DWDM). The deployment of DWDM systems by carriers has benefited them to a great extent. Tremendous capacity can now be released by carrying multiple wavelengths over a single fiber. This has enabled network operators to significantly reduce the cost of deploying multiple network overlays per service offering or the cost of deploying a single channel network. WDM becomes important when the installation space is small and more cables cannot be installed. Benefits of this system include fault detection, power monitoring, and wavelength separation.
The advanced DWDM system can support up to 192 wavelengths on a single pair of fibers, and each wavelength has the capacity to transport up to 100 Gbps of data. On the horizon is the high capacity of 400 Gbps and 1 Tbps. In the early stages of implementation, many of these features were not adequately provided or implemented by WDM device vendors. However, with the new DWDM technology, many operators want to quickly move to 100 Gbps optical DWDM networks for long haul networks to meet the increasing customer demand for bandwidth and data traffic. All these factors will have a positive impact on the market during the forecast period.
Different architecture requirements are a major challenge to the growth of the market. The network architecture requirements of regional carriers, such as tier 2 and tier 3 carriers, have different from Tier 1 carriers, which use integrated Switched Optical Transport Network (OTN) as the transport technology. The applicability and match of OTN switching into the regional carrier’s space must be evaluated. Local carriers may not need such high-capacity networks because bandwidth demand from their coverage areas may be significantly lower.
Regional carriers need to evaluate and compare the benefits offered by OTN versus alternative technologies, such as SONET and reconfigurable optical add/drop multiplexer (ROADM) networks or packet networks. Preceding trends point to regional carriers embracing the same technology on different schedules. The adoption at different schedules affects the seamless integration of OTN technology in most regions, with only the metro cities benefiting from the technology. Therefore, the network architecture requirements of regional carriers can be a significant challenge to the growth of the market during the forecast period.
The market share growth by the datacom segment will be significant during the forecast period. The datacom segment includes the sales of fiber optic transceivers to major firms that focus on deploying fiber optic networks for data transmission and interconnection purposes at data centers.
The datacom segment was valued at USD 2.64 billion in 2018. Optical transceiver modules are widely used in data centers as photoelectric conversion media. For 10G with a transmission distance of 10 meters, optical transceivers (or active optical cables (AOC) packaged with multimode fiber and vertical cavity surface emitting laser (VCSEL) optical transceiver modules) are an important cabling scheme. HD video, live VR and new applications will drive global network traffic. It also drives infrastructure as a service (IaaS), cloud computing, big data, and other new applications. They are not only expanding in terms of new deployments, but they are also evolving in terms of network architecture to deliver non-blocking network performance. These factors will drive the growth of the market during the forecast period.
The market for single-mode fiber cables is growing due to the increasing investment in long-haul network services and underwater network services. Thus, the transmission of data across such long distances is made possible by combining a large number of signals for transmission over a single optical fiber. Moreover, the increasing need for long-distance transmission of data will spur the demand for single-mode optical fiber cables. Increasing demand for single-mode optical fiber cables will increase the use of single-mode dark fiber. Thus, an increase in the adoption of 5G technology in the non-retail sector is expected to drive the demand for optical transceivers during the forecast period.
APAC is estimated to contribute 43% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional market growth and trends that shape the market during the forecast period.
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The market for fiber optic components, such as optical transceivers, is expected to witness substantial growth owing to the increase in data centers in APAC. The importance of data center operations among large enterprises and government agencies is increasing in APAC. A few data centers in the region are already being operated by CSPs and colocation vendors. Telecommunications vendors, such as NTT DATA and China Telecom, and certain global IT service organizations operate most data centers in the region. Many European data center providers are also considering Asia as a location after the UK's exit from the EU. This will be a major drive for the regional market.
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.
Applied Optoelectronics Inc.: The company offers optical transceivers such as Octal small form factor pluggable OSFP modules, Octal small form factor pluggable QSFP modules, Small form factor pluggable SFP28 modules, and small form factor pluggable SFP plus modules.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Amphenol Corp., Applied Optoelectronics Inc., Broadcom Inc., CBO GmbH, Ciena Corp., Fabrinet, Firecomms Ltd., FS.COM Inc., Fujikura Co. Ltd., Furukawa Electric Co. Ltd., II VI Inc., Koch Industries Inc., Lumentum Holdings Inc., Murata Manufacturing Co. Ltd., Phoenix Contact GmbH and Co. KG, Shaoxing ZKTel Equipment Co. Ltd., Smartoptics AS, Source Photonics, Sumitomo Electric Industries Ltd., and Texas Instruments Inc.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
Optical Transport Network Equipment Market: Optical Transport Network Equipment Market Analysis North America, APAC, Europe, South America, Middle East and Africa - US, China, India, Germany, UK - Size and Forecast
Optical Modulators Material Market: Optical Modulators Material Market by Type, Application, and Geography - Forecast and Analysis
Optical Interconnect Market: Optical Interconnect Market by Fiber Type, Connectivity, Product Type, and Geography - Forecast and Analysis
The market is experiencing a profound shift driven by the proliferation of 5G devices and the Internet of Things (IoT). With the demand for high-speed data center networks rising, there's a pressing need to address network complexity and enhance energy efficiency. Emerging technologies like silicon photonics and alternative materials are revolutionizing circuit designs, offering solutions for cloud storage and machine learning applications. As hyperscale data centers expand, so does the need for high-speed data transmission over fiber optics technology. The market thrives on delivering connectivity solutions, Internet usage with unmatched speed, scalability, and data flow for diverse networking applications.
Market Scope |
|
Report Coverage |
Details |
Page number |
170 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 16.68% |
Market growth 2024-2028 |
USD 10.31 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
14.51 |
Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
Performing market contribution |
APAC at 43% |
Key countries |
China, US, Japan, Germany, and India |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Amphenol Corp., Applied Optoelectronics Inc., Broadcom Inc., CBO GmbH, Ciena Corp., Fabrinet, Firecomms Ltd., FS.COM Inc., Fujikura Co. Ltd., Furukawa Electric Co. Ltd., II VI Inc., Koch Industries Inc., Lumentum Holdings Inc., Murata Manufacturing Co. Ltd., Phoenix Contact GmbH and Co. KG, Shaoxing ZKTel Equipment Co. Ltd., Smartoptics AS, Source Photonics, Sumitomo Electric Industries Ltd., and Texas Instruments Inc. |
Market dynamics |
Parent market analysis, Market Forecasting, 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 the market 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. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Fiber Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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