- Optical transceiver market for QSFP form factor to grow at highest CAGR during the forecast period.
- Data centers to hold the largest share of optical transceiver market during the forecast period.
- North America to hold the largest share of optical transceiver market during the forecast period.
Increasing the adoption of smart devices and rising data traffic has spurred growth of the optical transceiver market. Other drivers for the optical transceiver industry growth include growing demand for cloud computing applications and the increasing requirement for compact and energy-efficient transceivers.
The Optical Transceiver Market is expected to grow from $5.7 billion in 2020 to $9.2 billion by 2025, at a CAGR of 10.0%.
The Quad small form-factor pluggable (QSFP) form factor of optical transceivers is designed for high performance and low power consumption, which makes them ideal for data center
applications. With the advent of technological advancements such as AI, machine learning, and 5G communication, data traffic is increasing, which in turn is creating demand for high scale data centers. Therefore, the rise in data traffic is also creating opportunities for 100G, 200G, and 400G data transmission rates, which is also increasing demand for optical transceivers operating on form factors such as QSFP, QSFP+, QSFP14, and QSFP28.
The data center landscape is changing rapidly and attracting loads of investments to focus on the needs of increasing bandwidth, lower power, and more extended reach. Data rates of more than 100 Gbps have entered the market. Optical transceivers play an essential role in data centers for inter-data center connectivity or intra-data center connectivity. Data centers are using high-speed optical transceivers to fulfill high-speed data communication needs. With the advent of advanced technologies such as AI and 5G, there is an increased requirement for higher bandwidth, which is eventually necessary for data center applications.
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Furthermore, the rising adoption of smart devices and IoT is also responsible for the increasing demand for high data-rate enabled optical transceivers in data centers. Increasing interest of cloud service providers to adopt high-speed transceivers is also likely to drive market growth for data center applications.
North America is a major shareholder of optical transceivers. The growing demand for mobile data through wireless connectivity boosted the growth of the data center market and, consequently, the optical transceiver market to a substantial extent. Presence of the world’s largest data centers and cloud providers in the US, including the Big 5—Google (US), Apple (US), Facebook (US), Amazon (US), and Microsoft (US), provide growth opportunities for the market.
Demand for high data speed communication is driving growth of the 5G communication market across the US. For instance, several US-based telecommunication companies such as AT&T, T-Mobile, and others have announced the roll-out of 5G networks in 2019, which will provide faster data transfer and communication across multiple cities and towns of the US. This is expected to consequently increase data traffic across the networks in data centers, providing an opportunity for the optical transceiver market.
Major players in the optical transceiver market are II-VI Incorporated (US), FIT Hong Teng Limited (Taiwan), Lumentum (US), Sumitomo Electric Industries Ltd (Japan), Accelink (China), Applied Optoelectronics (US), Fujitsu Optical Components (Japan), Innolight (China), Mellanox (Israel), NeoPhotonics (US), Ciena (US), Cisco (US), Hisense Broadband (China), and Intel (US), NEC (Japan).
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