Artificial Intelligence (AI) is gaining momentum, and its growing prevalence is driving demand in data centers. As technology integrators implement generative AI more deeply into everyday life applications, the demand for computing power in data centers escalates.
According to Yole Intelligence, the server computer density that AI requires also generates significant heat, presenting energy efficiency and sustainability challenges. AI is the primary factor driving demand for data centers and the optical transceivers supporting it, but there are others: Yole Intelligence has identified other applications, such as UHD video and a variety of AR/VR applications and cloud services – social networking, business meetings, video streaming in UHD, e-commerce, and gaming applications, that will continue to drive growth.
Martin Vallo, Ph.D., senior analyst, Photonics at Yole Intelligence, said “In this dynamic context, revenue generated by the optical transceiver market increased 19.3%, from $9.8 billion in 2021 to $11 billion in 2022. It is expected to reach $22.3 billion in 2028 at a 12% CAGR for 2022-2028. This growth is driven by high demand for 800G high-data-rate modules by big cloud service operators and CSP s requiring increased fiber-optic network capacity.”
In its "Optical Transceivers for Datacom and Telecom Report," 2023 edition, the company, part of Yole Group, explains why DC operators and telecom carriers pay huge attention to the development of optical interconnect technology. This analysis helps in understanding the changes in DC network architecture and provides detailed market forecasts, market share analyses, supply chain reviews, and technology trends for optical transceivers in datacom and telecom.
In its 2023 report, Yole Intelligence’s analysts describe the competitive landscape and give a relevant overview of the supply chain. The global optical transceiver industry is highly competitive, with players ranging from large international companies offering a broad portfolio of products to smaller companies specializing in narrow markets. The key competitive factors in the optical transceiver market are the ability to provide leading-edge technologies for high-speed communications and to design and manufacture high-quality, reliable products, including customized solutions. Different techniques and approaches can be used to overcome physical limits to achieve higher data rates. It is also evident that the two competing strategies based on the InP and the silicon photonics platforms will coexist during the coming years as leading players are linked with both platforms.
Eric Mounier, Ph.D., fellow analyst at Yole Intelligence, stated “Under its continuous catch-up and accelerated development program, China is taking an increasingly prominent position in the optical communication industry. Nowadays, the core optical technology for high-speed modules is the domain of American and Japanese manufacturers, but China has invested heavily in photonic manufacturing platforms: GaAs , InP, and SiPh."
The Chinese government’s program—the Roadmap for the Development of the Optical Device Industry (2018-2022)—defined a national strategy to increase the market share of local producers of optical chips. The China-U.S. trade restrictions and ZTE’s ban may prompt China to increase its support for high-speed optical chips, and domestic optical chip production is expected to accelerate further.