Market will more than double by 2025 driven by heavy investments in data centers.
- Drivers of network traffic growth
- Macro trend analyses for both datacom and telecom
- Review of trends in data centers impacting the optical module market
- Detailed market revenue and volume of optical transceivers for 2017-2025 split by applications and speeds
- Detailed ASP evolution
- Comprehensive technology analysis of optical transceivers highlighting the trends for application from intra-data centers up to long-haul
- Evaluation of silicon photonics technology platform in term of technology and market dynamics
- Trend of 400G and beyond for datacom and telecom
- Optical transceiver industry analysis
- Understand the global landscape of fiber-optic communication and classify its technologies for newcomers to this field
- Straightforward and easy to understand explanations of the technology of optical transceivers
- Examine the application landscape, and associated technologies
- Review the optical transceiver industry and future trends
- Provide detailed market forecasts from 2017 to 2025 for optical transceivers in datacom and telecom
Table of Contents
Scope of the report 7
Impact of COVID-19 and basis for our scenarios 13
Executive summary 16
From telecommunication to fiber-optic communication (FOC) 44
- Historical perspective
- Introduction to telecom and datacom
- Datacom vs. Telecom
- Fiber-optic communication
FOC network architectures 58
- Typical public fiber network architecture
- Generic diagram of FOC network
- Network devices for telecom and datacom
FOC application trends 65
- Global network IP traffic growth
- Datacom vs. telecom
- Trends in data center
- Global IP traffic forecast
- Technical challenges – Shannon limit
Optical transceiver (OT) market forecast 84
- Datacom OT
- Telecom OT
Optical transceiver introduction 97
- Technology and trends
Optical transceiver applications 119
- Datacom trends
- Telecom trends
Optical transceiver trends 136
- 400G and beyond
Optical transceiver technology 155
- Key parameters in fiber-optic communication
- Evolution of silicon switching
- Fiber-optic communication scaling
Optical transceiver key components 202
- Laser diode
- Toward Photonic Integrated Circuits (PICs)?
Optical transceiver industry 221
- Mapping of key players at transceiver level
- Market shares
- 2017-2019 revenue growth/decline for OT suppliers
- 2020 revenue trends
- Technology platform – Indium Phosphide (InP) vs. Silicon Photonics (SiPh)
- Recent Mergers & Acquisitions (M&A)
- Supply chain
- Cost aspects – multi-mode vs. single-mode transceivers
- Silicon photonics
- Focus on China
- Global trends
- Trends in the 400G era
About Yole Développement 260
STREAMING ULTRA HD VIDEOS TO PROPEL OPTICAL TRANSCEIVER MARKET REVENUE TO $17.7B BY 2025
The state of the art of fiber-optic communication (FOC) technologies has advanced dramatically over the past 25 years. The highest capacity of commercial fiber-optic links available in the 1990s was only 2.5-10 Gb/s while today they can carry up to 800 Gb/s. The last decade of developments have enabled higher efficiency digital communication systems and solved problems with degraded signals.
Fiber optic networks consist of a set of optical network devices connected by optical fiber links, able to provide transport and related functionalities of optical channels carrying signals to final client. Data communication (datacom) is linked with cloud services in data centers (DCs) and often excludes voice services. Typical transmission distance is up to 100 km.
Telecommunication is any communication over a distance, typically over 100 km. Telecom includes voice services, wireless networks as well as data communication.
A transceiver gets its name from being both an optical transmitter that converts an electrical signal into a light signal, and an optical receiver that accepts the light signal and converts it back into an electrical signal. The optical transceivers (OTs) are widely used in server network cards, switches, routers and wireless base station equipment in a variety of network architectures and applications. Distances covered start from less than 50 meters for server and storage interconnections in data centers and enterprise networks to more than 800 km in telecom networks.
Network traffic growth has been increasing at an enormous pace over the decades and across all the network architectures from the longhaul, mobile access to intra-DC networks. This growth has been driven by streaming ultra-highdefinition (UHD) videos, which need ever higher data throughput, and now newly emerging digital applications and services requiring fast access to the digital networks. It appears that the success and demand for existing applications continuously drives scale and capacity of the underlying network infrastructure to points where further applications are enabled, renewing the cycle.
Revenue generated by optical transceivers reached around $7.7B in 2019 and is expected to more than double to around $17.7B by 2025 at a compound annual growth rate for 2019-2025 of 15%. This growth will be driven by high volume adoption of expensive high data rates, 400G and 800G, modules by big cloud service operators investing more in new datacenters and high demand of wireless optical transceivers for 5G networks from national telecom operators. COVID-19 is affecting optics manufacturing globally and sales of optical transceiver modules will be negatively impacted in 2020. However, demand for optical modules by data center operators is very strong in China with local government support for 5G deployment and cloud data centers.
A HIGHLY FRAGMENTED INDUSTRY!
The optical transceiver industry is very fragmented and tightly linked with other optical communication technologies that form an ecosystem. Many companies compete and there is no single company that dominates the market. Due to this high competitiveness level, players involved in the OT business have different strategies of component manufacturing.
One of the industrial trends is the disaggregation in the supply chain. High pressure to reduce prices of advanced optical modules leads to very low margins. This forces some suppliers to abandon the vertically integrated component design and module manufacturing approach. However, the vertical integration strategy, which is characteristic for players serving coherent technology, is the best way how to optimize costs and time to market.
Today, their most significant revenue comes from coherent technologies for DC interconnect optical transport solutions. This is a great opportunity for deployment of still-expensive 400G optics. Vertical integration drives the costs down, leading to migration of 400G modules down into connections inside data centers.
Migration to high data rate transceivers is accompanied by high costs, but also high pressure on prices. As a result of these effects we saw strategic investments of market leaders to strengthen their positions in recent years. IIVI’s acquisition of Finisar strengthens its leading position in the optical module market as well as among InP-based platform players and takes advantage of the platform for new 3D sensing applications. Lumentum, after merging with Oclaro, is able to source the majority of its components internally. This unlocks cost synergies and enables Lumentum to enter the market with coherent technologies with higher margins than high competitive ethernet transceivers. Cisco as a network equipment vendor is preparing for the future by investing in the silicon photonics technology platform. Acquiring Luxtera and Acacia Communication enables Cisco to develop future photonic platforms for optical transceivers.
Vendors of optical systems today are losing the exclusivity of their own ecosystems as coherent technologies become pluggable and more flexible.
But in spite of recent consolidation the market is still very fragmented. Yole Développement expects future merger and acquisition activity to be related to technology expertise, high volume production and low costs. This is to meet mainly hyperscale internet companies’ expectations and strengthen the position of transceiver suppliers in the both main regions of China and the USA.
NEW WAYS OF INTEGRATING MULTIPLE TECHNOLOGIES IS KEY; SILICON PHOTONICS GAINS TRACTION
The evolution of multiple technologies has enabled transmission speed of 400G and beyond in long haul and metro networks. Today’s trend of migration to 400G speeds stem from cloud operators’ demand to interconnect data centers.
Furthermore, exponential increase of capacity of digital communication networks and growing numbers of optical ports impact optical module technology hugely. The new form factors are increasingly universal and designed to reduce their size and thus power consumption. Inside modules the optics and integrated circuits are getting closer together.
Therefore, silicon photonics might represent a key enabling technology for further development of optical interconnect solutions needed to address growing traffic. This technology will play an important role in 500m–80km distance applications. Industry is working on heterogeneous integration of InP lasers directly onto silicon chips. The advantage is scalable integration and elimination of the cost and complexity of the optical package. Reduced efficiency and lower optical power at high temperature are the typical challenges for these lasers.
Besides increasing speed by integrating amplifiers, the higher data throughput is also achieved by integrating state-of-the-art digital signal processing chips providing different multilevel modulation techniques such as PAM4 or QAM. Another technique to increase data rates is parallelization that enables high speed interfaces to be implemented using parallel lanes, either fibers or wavelengths within fibers.
Progress in integration of optical component technologies has led to dramatic reductions in complexity and cost of optical transceivers. The massive growth in bandwidth has yielded a 10 to 100-fold decrease in cost per transmitted bit.
Acacia Communication, Accelink, Adtran, ADVA, Alibaba, Amazon Web services, Apple, Applied 0ptoelectronics Inc (AOI), Arista, ATOP, AZ by CyrusOne, Baidu , Broadcom, ChampionONE, Ciena (Cyan), Cisco, ColorChip, Dell, E.C.I. Networks, Ekinops, Emcore, Eoptolink, Facebook, Fiberhome, Finisar (now II-VI), Foxconn Interconnect Technology (FOIT), Fujitsu Networks, Fujitsu Optical components, Gigalight, Google, HG Genuine Optics, Hisense Broadband, Huawei, Huawei, HUBER+SUHNER Cube Optics AG, IBM+Softlayer cloud services , II-VI, Infinera (Coriant, Transmode), InnoLight, Inphi, Intel, IPG Photonics (Menara Network), J.P. Morgan, Juniper Networks, Lumentum, Macom, Mellanox, Microsoft, NEC, NeoPhotonics and more…
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