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The Optical Transceiver Market size is forecast to increase by USD 4.71 billion at a CAGR of 14% between 2022 and 2027. In 2017, China held the largest market share, projecting an annual revenue of USD 9.43 billion. The growth of the global market is being propelled primarily by strategic collaboration among supply chain members. The main trend observed in the market is the migration of OTNs from SONET technology towards wavelength-division multiplexing (WDM) architecture, with a particular focus on dense WDM (DWDM). The market research and growth report provides market size, historical data spanning from 2017 to 2021, and future projections, all presented in terms of value in (USD billion) for each of the mentioned segments.
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The 5G technology revolutionizes connectivity ICs with its promise of ultra-fast speeds and low latency, driving demand for 5G devices across various sectors like the healthcare and automotive industries. As networks evolve, core, spine, and leaf layers architecture becomes critical to manage network complexity efficiently while ensuring energy efficiency and adhering to network equipment standards. Innovations such as circuit designs and thermal management techniques optimize performance, leveraging alternative materials for enhanced durability. Cloud-based solutions like cloud storage facilitate data management, while advancements in AI and machine learning empower industries with deep insights. With fiber optics technology and AI infrastructure, the optical communication landscape is set for groundbreaking transformations, bolstered by widespread internet penetration and high adoption rates. Our researchers analyzed the data with 2022 as the base year and the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Strategic collaboration among supply chain members is the key factor driving the growth of the global optical transceiver market. The growing IoT market and increased enterprise data, video, and IP/Internet traffic are factors driving the need for high bandwidth applications 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 optical fiber modules. Such alliances are anticipated to drive the adoption of optical data transmission network equipment, which, in turn, will fuel the demand for optical transceivers during the forecast period.
The migration of OTNs toward WDM architecture is the primary trend in the global optical transceiver 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 optic transceiver. 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 fiber optic transceivers, and each wavelength has the capacity to transport up to 100 Gbps of data rate. 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 high bandwidth applications 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 global optical transceiver market. The network architecture requirements of regional carriers, such as tier 2 and tier 3 carriers, are different from Tier 1 carriers, which use integrated Switched Optical Transport Networks (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 high bandwidth applications 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 equipment architecture requirements of regional carriers can be a significant challenge to the growth of the market during the forecast period.
The optical transceiver market is witnessing a significant surge due to the rapid adoption of 5G technology and the increasing demand for high-speed internet connectivity. As 5G adoption accelerates, there's a growing need for advanced Interconnect components, transmitters, and receivers to support the transmission of electrical signals and light signals over optical cable networking infrastructure. This technology is vital for enabling various applications, including Voice over Internet Protocol (VoIP) and LTE services, which rely on seamless and reliable data transmission. With the exponential growth in internet usage, particularly for bandwidth-intensive activities, the importance of robust optical transceiver solutions continues to escalate.
The market share growth by the datacom segment will be significant during the forecast period and was valued at USD 2.32 billion in 2017. The datacom segment includes the sales of optical fiber to major firms that focus on deploying fiber optic networks for data transmission and interconnect component purposes at data centers. The modules are widely used in data centers as photoelectric conversion media. For 10G with a transmission distance of 10 meters, (or active optical cables (AOC) packaged with multimode fiber and vertical cavity surface emitting laser (VCSEL) 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. Data centers 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 global market during the forecast period.
APAC is estimated to contribute 42% 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 for optical fiber components, such, 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 optical communication 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 UKs exit from the EU. This will be a major drive for the regional market.
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The Market is fragmented in nature. Some significant players include Amphenol Corp and Applied Optoelectronics Inc
This market growth and trends report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:
Broadcom Inc., CBO GmbH, Ciena Corp., II VI Inc., Fabrinet, Firecomms Ltd., FS.COM Inc., Fujikura Co. Ltd., Furukawa Electric Co. Ltd., Koch Industries Inc., Lumentum Holdings Inc., Murata Manufacturing Co. Ltd., Phoenix Contact GmbH and Co. KG, Shaoxing ZKTel Equipment Co. Ltd., Source Photonics, Sumitomo Electric Industries Ltd., Texas Instruments Inc., and Smartoptics AS
The market is witnessing significant growth driven by the proliferation of smart devices and the surge in data traffic across cloud-based services. The demand for small, energy-efficient transceivers is particularly high, fueled by the expansion of mega data centers and the telecom sector's need for enhanced data center applications. Technological advancements, such as the CFP module and SFF optical transceiver modules, are enhancing port density and reducing power consumption. With a focus on compact form factors and meeting customer demands, the market offers solutions compatible with portable devices, LAN, and ethernet protocol. Various transceiver modules like SFP, SFP+, SFP28, 40G QSFP+, QSFP28, and QSFP-DD support data rate ranging from 10 Gbps to 40 Gbps across single-mode and multimode fibers, with wavelength bands including 850 nm, 1310 nm, and 1550 nm for applications such as data aggregation and enterprise-related applications
The market is witnessing significant growth driven by the proliferation of 5G networks and the increasing adoption of 5G technology across various industries. With the rise of connected devices and the Internet of Things (IoT), demand for high-speed data transmission and low latency is driving the deployment of optical transceivers in data center networks and transmitter, receiver ,telecom infrastructure. Advanced technologies such as silicon photonics and DSP technologies are enhancing network connectivity ICs and bandwidth capabilities, supporting applications in video streaming, networking, and online entertainment. As data usage continues to surge, optical transceivers play a crucial role in enabling high data rates, scalability, and efficient data flow within hyperscale data centers and cloud services.
The market growth analysis report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 - 2027.
Industry Scope |
|
Report Coverage |
Details |
Page number |
167 |
Base year |
2022 |
Historic period |
2017 - 2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 14% |
Market growth 2023-2027 |
USD 4.71 billion |
Market structure |
USD Fragmented |
YoY growth 2022-2023(%) |
13.40 |
Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
Performing market contribution |
APAC at 43% |
Key countries |
US, China, Japan, India, and Germany |
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., II VI Inc., Fabrinet, Firecomms Ltd., FS.COM Inc., Fujikura Co. Ltd., Furukawa Electric Co. Ltd., Koch Industries Inc., Lumentum Holdings Inc., Murata Manufacturing Co. Ltd., Phoenix Contact GmbH and Co. KG, Shaoxing ZKTel Equipment Co. Ltd., Source Photonics, Sumitomo Electric Industries Ltd., Texas Instruments Inc., and Smartoptics AS |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, 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. |
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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 Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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