Optical Transceivers for Datacom and Telecom 2024

• Table of content
• Glossary
• Definitions
• Objectives of this report
• Scope of this report
• Methodologies & definition
• About the authors
• Companies cited
• What we got right, what we got wrong
• Who should be interested in this report?
• 3-Page summary
• Executive summary
• Global context – telecommunications infrastructure
  • Global Trends in Datacom
    • Artificial intelligence
  • Global Trends in Telecom
• Market forecasts
  • Datacom
  • Telecom
• Market share & supply chain
• Datacom
  • Towards Higher Speeds
  • 800G and Beyond
  • Switch ASIC and SERDES
• Telecom
  • Coherent Pluggable Modules
  • Passive Optical Networks
  • 5G / 6G Optical Networks
• Technology trends
  • New Materials for Modulators
  • Linear Drive Optics
• Industry
  • Chinese Market and Industry
  • USA vs. China
• M&A / Partnerships
• Appendix
  • Key Parameters in Fiber-Optic Communication  
  • From Telecommunication to Fiber-Optic Communication
  • Optical Transceiver –
    400G QSFP-DD DR4
  • Optical Transceiver – 100G QSFP28 CWDM
• Yole Group relateds products
• How to use our data?
• Corporate Presentation

Artificial Intelligence is driving market to belle epoque

Early in 2023, the optical modules market outlook was bleak due to reduced data center demand and capital expenditure constraints. However, from March 2023, demand for 800G modules surged, driven by hyperscale clients like Google, Amazon, and Nvidia, leading to significant growth in orders and shipments. Later in 2023, Microsoft and Meta also increased their demand for 400G modules, reflecting the expanding AI-driven market. Suppliers prepared for this growth by enhancing production capacity and securing raw materials, positioning themselves for significant revenue increases in the 800G and 400G segments. 
The optical transceiver market saw a slight revenue decrease from $11B in 2022 to $10.9B in 2023 but is expected to reach $22.4B by 2029, driven by high demand for high-data-rate modules above 400G from cloud service operators and national telecom operators. A 27% revenue growth rate is anticipated in 2024 due to large AI infrastructure orders from Nvidia and data center network upgrades to 800G.

Driven by the AI, 800G applications and transition 200G/lane ecosystem technologies to have significant impact on the industry

Demand for 400G and 800G datacom transceiver modules, especially from Nvidia, Google, and Amazon, significantly impacts revenue. Coherent and Innolight lead in multimode and single-mode applications, respectively. The industry is shifting from 100Gb/s to 200Gb/s per lane for 800G links, aiming to reduce power consumption and costs. EML and CW-DFB devices are ready for 200G/lane applications, while 200G/lambda VCSELs are expected to enter mass production in 2026.

Low power and scalability of technologies will enable widespread deployment of high-speed optics

Integrated photonics promises low-cost, scalable optical solutions, particularly in communication. As optical links move to higher speeds and shorter ranges, silicon photonics (SiPh) stands out. Leveraging CMOS technology, SiPh offers high performance, low cost, high yield, and volume manufacturing advantages. SiPh can host various photonic components but is limited in laser sources compared to III-V materials like InP and GaAs. 
An alternative to CPO is linear drive pluggable optics (LPOs), which lack DSPs or CDRs, reducing power consumption and latency. This is crucial for applications like switch-to-switch, switch-to-server, and GPU-to-GPU connectivity in ML and HPC. LPOs will be available for both multi-mode (VCSEL) and single-mode applications (EML, SiPh), but work best with linear modulators like TFLN, BTO, and Organics combined with SiPh. The technology ecosystem for LPOs is ready, with 100G SerDes integrated into the latest network switch chips. Discussions at OFC 2024 highlighted Linear Receive Optics (LROs) for 1600G (8x200G) applications, which improve performance, manufacturing margins, and robustness.

Accelink, Adtran, ADVA, Albis, Alibaba, Amazon Web Services, Applied Optoelectronics Inc (AOI), Arista, AT&T, Baidu, Broadcom (Foxconn Interconnect Technology, Avago), Broadex, China Mobile, China Telecom, China Unicom, Ciena (Cyan), CIGtech, Cisco (Acacia Communication, Luxtera), Coherent (II-VI, Finisar), ColorChip, Crealights, Credo, Dell EMC, Dongguan Mentech Optical & Magnetic, Dust Photonics, E.C.I. Networks, EFFECT Photonics, Eoptolink, FiberHome, Fujikura, Fujitsu Networks, Fujitsu Optical Components, Furukawa, Gigalight, Global Communication Semiconductors, Google Cloud Platform, Guangdong Jiulian Technology, Guangxun Technology, Hengtong Group, HG Genuine Optics, Hisense Broadband, HiSilicon Optoelecetronics, Huawei, Hyperlight, Infinera (Coriant, Transmode), InnoLight, Intel, Jiulian Technology, Juniper Networks, Linktel, Liobate, Lumentum (CloudLight, Oclaro, NeoPhotonics,IPG Photonics (Menara Network)), Lumiphase, Luxshare, MACOM, Marvell (Inphi), Maxim Integrated, Meta, Microsoft Azure, Mitsubishi Electric, MOLEX (Oplink), NEC, New Photonics, NLM PhotonicsNokia (Alcatel Lucent, Elenion), Nubis Communication, NTT Electronics, NVIDIA (Mellanox), O-net, OE Solutions, Optical Library Technology, Ori-Chip Optoelectronics, Polariton Technologies, Ranovus, Renesas (Integrated Device Technology), Rockley Photonics, Sicoya, SiFotonics Technologies, Skorpios Technologies, Semtech, Shenzhen SDG Information (SDGI), SoftBank, Source Photonics, Sumitomo Electric Device Innovations, Tacklink, T&S Communications, TE Connectivity, Tencent, Verizon, YOFC, Zhongtian Technology, ZTE, and more…

Report objectives:

• To provide context for why DC operators and telecom carriers pay huge attention to optical interconnect evolution:
  • IP traffic growth, new applications such as market drivers, other trends in data centers impacting optical module technology, the market and industry, and the classification of fiber-optic communication and its technologies.
• Provide detailed market forecasts from 2019 - 2029 for optical transceivers in datacom and telecom.
  • Datacom:
    • Split by data rates
    • AOCs and detachable modules split by optical technologies (VCSEL, DML, EML, SiPh)
    • Split by applications – transmission distance (0-3m, 3m-100m, 100m-500m, 500m-2km, <10 km) and subsequently split by optical technologies (VCSEL, DML, EML, SiPh)
    • Split by PMDs for 400G and 800G (differentiation of 100G/lambda and 200G/lambda modules)
    • Focus on 800G: split by optical technologies (VCSEL, EML, SiPh), modulator materials, Linear Drive Pluggable optics
    • Estimate of AI optical transceiver market and split by optical technologies (VCSEL, EML, SiPh)
  • Telecom:
    • Split by applications (xWDM, PON, Wireless)
      • xWDM: focus on 100ZR, 400ZR/ZR+, 800ZR
    • Split by data rates
  • Provide detailed market share analyses for the last three years, split by datacom and telecom.
  • Review the supply chain for datacom and telecom.
  • Examine the application landscape and associated technologies for datacom and telecom.
  • Review the trends toward higher speed and improved power efficiency:
    • Review the new modulator technologies: TFLN, BTO, organics, and graphene
    • Review the potential and challenges of linear drive (no retimed) pluggable optical transceivers
  • Review the optical transceiver industry, with a focus on China.

Key feature:

To provide the context of why DC operators and telecom carriers pay huge attention to optical interconnect evolution

Provide detailed and updated market forecasts from 2019 to 2029 for optical transceivers in datacom and telecom

• Split by technology platform (VCSEL, EML, SiPh)
• Split by modulator material (TFLN, BTO, Organic)
• Focus on LPO
• Focus on AI

Provide detailed market share analyses of the last three years split by datacom and telecom

Review the supply chain for datacom and telecom

Examine the application landscape, and associated technologies for datacom and telecom

Review the optical transceiver industry with a focus on China

What’s new?

Review the trends toward higher speed and improved power efficiency

• Review the new modulator technologies TFLN, BTO, Organics and Graphene
• Review the potential and challenges of linear drive (no retimed) and half retimed pluggable optical transceivers