Optical Transceiver Market by Form Factor (SFF and SFP; SFP+ and SFP28; XFP; CXP), Data Rate, Wavelength, Fiber Type (Single-mode Fiber; Multimode Fiber), Connector (LC; SC; MPO; and RJ-45), Protocol, Application and Region - Global Forecast to 2029
[355 Pages Report] The global optical transceiver market size is valued at USD 13.6 billion in 2024 and is expected to reach USD 25.0 billion by 2029, growing at a CAGR of 13.0% from 2024 to 2029. Factors such increasing adoption of smart devices and rise in data traffic, growing demand for cloud-based services, and rising demand for compact and energy-efficient transceivers drives the optical transceiver market.
Optical Transceiver Market Forecast to 2029
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Optical Transceiver Market Dynamics
Driver: Emerging focus on 5G networks
The increased usage and advancements in Internet applications have led to the development of 5G networks. In order to implement 5G networks, there is a need for a large capacity and long-distance data transmission, which can be provided by an optical transceiver. The benefits of 5G for businesses will be gradually realized as the network is progressively deployed in enterprises and telecommunications.
An increasing number of connected devices drive the need for high-speed communication networks, such as 5G. Optical transceivers are required in these markets to minimize errors and maximize the throughput of information being transferred and received by the system. Various telecom players have started the implementation of 5G across the globe. By August 2023, Telefonica Germany achieved a 5G coverage of 90%, with plans to achieve nationwide coverage by 2025. For developing high bandwidth-intensive networks, the implementation of 5G high-end network architecture integrated with optical transceivers is necessary. Increasing 5G adoption will drive the demand for high-speed transceivers in data centers due to data traffic growth.
5G technology is set to revolutionize the use of smart devices like smartphones and gaming consoles. This is because 5G is designed to provide significantly reduced latency, which means faster and more reliable connections. In April 2023, the GSA reported that there were already 1,513 commercially available 5G devices, making up 79.8% of all announced 5G devices.
Restraint: Increasing network complexity
Multiple protocols, platforms, and the consistent need for compact networks have resulted in the growing usage of connectivity ICs. With time, transceiver ICs have become more compact and efficient. However, as hardware and software both play a key role in emerging infrastructures, such as the Internet of Things (IoT) and the adoption of open-source platforms through the cloud, networks demand more compactness. These compact modules require drop modules for multiplexing and demultiplexing, variable optical attenuators, and tap power monitors in a single compact unit for network monitoring and control. In addition, the increasing connectivity speed and high-bandwidth connections over fixed and wireless networks have resulted in increased complexity of the network.
Data center networks consist of various layers: core, spine (distribution layer), and leaf (access layer). Transceivers are spread across these layers. Due to the heavy data traffic often overwhelming switches in these layers, the receiver units of transceivers may encounter delays in data packet delivery. These challenges highlight the necessity for more compact form factors, ensuring compatibility and maximizing space within the network. The existing network infrastructure is fragmented and primarily focused on domain-specific growth rather than a consumer-centric joint approach. To address this, companies must embrace innovative and network-oriented strategies to reduce network complexity, which hinders the optical transceiver market's growth.
Opportunity: Advancements in optical technology
Advancements in optical technology, particularly the development of silicon photonics, present significant market opportunities for optical transceiver manufacturers. Silicon photonics offers a more efficient and cost-effective approach to building optical transceivers by integrating optical components onto silicon chips. This integration not only reduces the complexity of manufacturing but also lowers costs, making optical transceivers more accessible to a wider range of applications and industries. The scalability of silicon photonics enables the production of transceivers that can support higher data rates, meeting the demands of modern data-intensive applications such as cloud computing, 5G networks, and high-performance computing.
As silicon photonics technology matures, it opens doors to new market segments that were previously cost-prohibitive. Industries such as healthcare, automotive, and industrial automation can now leverage the benefits of optical transceivers for applications such as high-speed data transmission in medical imaging, autonomous vehicle systems, and smart manufacturing processes. The increased adoption of silicon photonics-based transceivers also fuels innovation in other areas of optical networking, such as longer-distance transmissions and higher-density interconnects. Overall, the ongoing advancements in optical technology, particularly silicon photonics, create a fertile ground for optical transceiver manufacturers to expand their market reach and cater to diverse and growing application needs across various industries.
Challenge: Minimizing power consumption
Power consumption is a significant challenge facing optical transceiver manufacturers as data centers and network operators place increasing emphasis on energy efficiency. With the exponential growth in data traffic and the expansion of data center infrastructure, the demand for optical transceivers that can deliver high performance while consuming minimal power is on the rise. This presents a dilemma for manufacturers who must strike a balance between meeting the performance requirements of high-speed data transmission and minimizing the power consumption of their transceiver designs.
The challenge is particularly acute in large-scale data center environments where power consumption directly impacts operational costs and environmental sustainability. High-power optical transceivers not only contribute to increased electricity bills but also require additional cooling systems, further adding to the overall energy consumption of the data center. Network operators are seeking more energy-efficient solutions to reduce their carbon footprint and operating expenses, thereby driving the demand for optical transceivers with lower power consumption profiles.
Furthermore, as data rates continue to climb with the evolution of networking standards, such as 400G and beyond, the power requirements of optical transceivers also increase. Manufacturers face the challenge of developing innovative technologies and materials to improve the efficiency of optical components, such as lasers and modulators, without compromising performance. This requires research & development efforts to explore new materials, design architectures, and manufacturing processes that can deliver higher data rates with reduced power consumption.
Addressing the power consumption challenge in optical transceivers involves a multi-faceted approach, including optimizing circuit designs, enhancing thermal management techniques, and exploring alternative materials. Manufacturers are also exploring technologies like silicon photonics, which inherently offer lower power consumption due to the integration of optical components on silicon substrates. Collaborations with industry partners and research institutions are crucial to driving innovation in power-efficient optical transceiver solutions that meet the evolving needs of energy-conscious data centers and network operators.
Optical Transceiver Market Ecosystem
The optical transceiver market is competitive. It is marked by the presence of a few tier-1 companies, such as Coherent Corp. (US), INNOLIGHT (China), Accelink Technology Co. Ltd. (China), and Cisco Systems, Inc. (US). These companies have created a competitive ecosystem by focusing on partnership, collaboration, and acquisition to achieve competitive advantage.
Data center segment to hold the largest share of market during the forecast period.
In 2023, the data center applications segment dominated the market and is expected to have the highest CAGR during the forecast period. This growth is primarily attributed to the widespread adoption of cloud storage and advancements in technologies like machine learning, artificial intelligence (AI), and deep learning. These technological advancements are leading to a surge in data traffic across networks, creating a need for efficient data communication through high data rate transceivers. Furthermore, the rise of hyperscale data centers is fueling demand for high data rate optical transceivers, including 100G, 200G, 400G, and 800G, to facilitate the rapid transmission of large volumes of data.
Less than 1 Km segment to dominate the market during the forecast period.
Optical transceivers with an operational range of less than 1 km held the largest market share in 2023 and are expected to continue dominating the market throughout the forecast period. These transceivers are also expected to register the highest CAGR during the forecast period. Growth in this market segment is mainly driven by the transition of high-scale data centers towards adopting high data rate components, such as transceivers for data communication. This is due to technological advancements such as AI, machine learning, and 5G communications. Data centers are operated for short distances and require a high data transmission rate for transferring huge packets of information. The need for high-speed communication in data centers is also driving the industry for high-data-rate optical transceivers (such as 100G, 200G, 400G, and 800G) for distances of less than 1 km.
Optical transceivers operating in 1310 nm band to grow at highest CAGR during forecast period
Transceivers operating at the 1310 nm bandwidth are expected to grow at the highest CAGR during the forecast period. This is due to several factors, including lower levels of scattering, high data transmission rates, improved accuracy, and better security. The 1310 nm bandwidth level is also designed to operate at higher temperatures, with lower power consumption and reduced costs. Single-mode fibers can be optimized for 1310 nm wavelengths, resulting in lower fiber optic attenuation. These optical transceivers support high-speed data transmission with minimal absorption losses. This makes them highly desirable for high-speed computing across data center applications. The CWDM (Coarse Wavelength Division Multiplexing) optical module can be implemented for the 1310 nm wavelength, providing high flexibility, economy, and networking reliability. It saves optical fiber resources and reduces construction costs.
Asia Pacific to grow at the fastest CAGR during the forecast period.
The Asia Pacific has become a global hub for substantial investments and business expansions. The region offers competitive manufacturing costs due to the cost-effective advantage of cheap labor in China. Moreover, Asia Pacific is a leading producer and supplier of electronics products such as smartphones, wearable devices, home assistants, IoT-based security systems, and computing devices. As a result, this region drives the optical transceiver market share , which is an essential component for internet connectivity in these electronic products.
Furthermore, the emergence of advanced technologies such as AI, IoT, and big data has paved the way for large-scale data center applications. Global tech giants like Facebook (US), Amazon.com, Inc. (US), Microsoft (US), Google LLC (US), Alibaba Group Holding (China), and Baidu, Inc (China) have established their data centers in Asia and are expanding their presence. Chinese and Indian consumers currently drive the Asia Pacific market due to their increasing adoption of high-speed broadband services and mobile devices.
Optical Transceiver Market by Region
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Top Optical Transceiver Companies - Key Market Players:
The optical transceiver companies is dominated by globally established players such as Coherent Corp. (US), INNOLIGHT (China), Accelink Technology Co. Ltd. (China), Cisco Systems, Inc. (US), Hisense Broadband, Inc. (China), Lumentum Operations LLC (US), Sumitomo Electric Industries, Ltd. (Japan), Broadcom Inc. (US), Fujitsu Optical Components Limited (Japan), and Intel Corporation (US). These players have adopted product launches/developments, partnerships, collaborations, and acquisitions for growth in the market.
Optical Transceiver Report Scope:
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Report Metric |
Details |
| Estimated Value | USD 13.6 billion in 2024 |
| Expected Value | USD 25.0 billion by 2029 |
| Growth Rate | 13.0% CAGR |
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Market size available for years |
2020–2029 |
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Base year considered |
2023 |
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Forecast period |
2024–2029 |
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Forecast units |
Value and Volume (USD Million/Billion) |
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Segments Covered |
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Region covered |
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Companies covered |
The key players in the optical transceiver market are Coherent Corp. (US), INNOLIGHT (China), Accelink Technology Co. Ltd. (China), Cisco Systems, Inc. (US), Hisense Broadband, Inc. (China), Lumentum Operations LLC (US), Sumitomo Electric Industries, Ltd. (Japan), Broadcom Inc. (US), Fujitsu Optical Components Limited (Japan), and Intel Corporation (US). |
Optical Transceiver Market Highlights
The study categorizes the optical transceiver market based on Distance, Wavelength, Data Rate, Form Factor, Connector, Fiber Type, Application, Protocol, and Region
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By Wavelength: |
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By Data Rate: |
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By Form Factor: |
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By Connector: |
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By Fiber Type: |
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Recent Developments in Optical Transceiver industry :
- In October 2023, Lumentum Operations LLC (US) launched the Lumentum 800G ZR+ and 0dBm 400G ZR+ transceivers to facilitate seamless connectivity between data centers. These devices boast data rates of up to 800 Gbps on a single wavelength.
- In July 2023, Coherent Corp. (US) introduced its 800G ZR/ZR+ transceiver in ultracompact QSFP-DD and OSFP form factors for optical communications networks. Coherent's 800G ZR/ZR+ transceivers can plug directly into QSFP-DD and OSFP transceiver slots on IP routers.
- In March 2023, Hisense Broadband, Inc. (China) launched the 800G QSFP-DD BiDi SR4.2 transceiver, supporting 800Gbps over 100m of multimode fiber with dual-wavelength BiDi transmission.
Frequently Asked Questions (FAQs):
Which are the major companies in the optical transceiver market? What are their major strategies to strengthen their market presence?
Coherent Corp. (US), INNOLIGHT (China), Accelink Technology Co. Ltd. (China), Cisco Systems, Inc. (US), and Hisense Broadband, Inc. (China) are some of the major companies operating in the optical transceiver market. Partnerships, and acquisitions were the key strategies these companies adopted to strengthen their optical transceiver market presence.
What are the drivers for the optical transceiver market?
Drivers for the optical transceiver market are:
- Increasing adoption of smart devices and rise in data traffic
- Growing demand for cloud-based services
- Rising demand for compact and energy-efficient transceivers
- Growing importance of mega data centers
- Emerging focus on 5G networks
- Increasing popularity of bandwidth-intensive applications like virtual reality (VR) and augmented reality (AR)
What are the challenges in the optical transceiver market?
Changing customer demands for portable devices and better speeds, and Minimizing power consumption are among the challenges faced by the optical transceiver market.
What are the technological trends in the optical transceiver market?
Silicon photonics (SiPh) technology , XR optics-based networking solutions, and Ultra-high-speed 800G optical transceivers are a few of the key technology trends in the optical transceiver market.
What is the total CAGR expected to be recorded for the optical transceiver market from 2024 to 2029?
The CAGR is expected to record a CAGR of 13.0% from 2024-2029.
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The study involved four major activities in estimating the size of the optical transceiver market. Exhaustive secondary research has been done to collect information on the market, peer market, and parent market. Validation of these findings, assumptions, and sizing with industry experts across the value chain through primary research has been the next step. Both top-down and bottom-up approaches have been employed to estimate the global market size. After that, market breakdown and data triangulation have been used to estimate the market sizes of segments and subsegments.
Secondary Research
Various secondary sources were used to identify and collect relevant information. These include corporate filings such as annual reports, press releases, investor presentations, and financial statements; trade, business, and professional associations; white papers, journals, and articles from recognized authors; certified publications related to optical transceiver; directories; and databases.
Secondary research was conducted to obtain key information about the supply chain of the industry, the monetary chain of the market, the total pool of key players, the segmentation of the market according to industry trends to the bottommost level, geographic markets, and key developments from the market-oriented perspective. Secondary data was collected and analyzed to arrive at the overall market size, which was further validated through primary research.
Primary Research
In the primary research process, various primary sources, from both supply and demand sides, were interviewed to obtain qualitative and quantitative information for this report. Primary sources from the supply side included experts such as chief executive officers (CEOs), vice presidents, marketing directors, technology and innovation directors, SMEs, consultants, and related key executives from the major companies and organizations operating in the optical transceiver market.
After the complete market engineering process (which includes market statistics calculations, market breakdown, market size estimations, market forecasting, and data triangulation), extensive primary research was conducted to gather information and verify and validate the critical market numbers.
Several primary interviews were conducted with experts from both the demand and supply sides across four major regions—North America, Europe, Asia Pacific, and RoW. Approximately 25% of the primary interviews were conducted with demand respondents and 75% with supply respondents. This primary data was collected through questionnaires, emails, and telephonic interviews.
To know about the assumptions considered for the study, download the pdf brochure
Market Size Estimation
Both top-down and bottom-up approaches have been used to estimate and validate the total size of the optical transceiver market. These methods have also been extensively used to estimate the sizes of various market subsegments. The research methodology used to estimate the market sizes includes the following:
- Identifying the number of players in the optical transceiver market offering products that are less than 10 Gbps, 10 Gbps to 40 Gbps, 41 Gbps to 100 Gbps, and more than 100 Gbps
- Identifying the annual shipment of products that are less than 10 Gbps; 10 Gbps to 40 Gbps; 41 Gbps to 100 Gbps; and more than 100 Gbps
- Identifying the average price of the abovementioned products for different companies
- Identifying various current end uses of optical transceivers
- Analyzing each end-use segment and application, along with the related major companies in the market
- Understanding the demand generated by different end uses for various applications
- Tracking the ongoing and upcoming installation of optical transceivers across end-use segments and forecasting the market based on these developments and other parameters
- Conducting multiple discussions with primary respondents to understand the types of OEMs, resellers, manufacturers, and assembling units developed for end-use segments; the discussions help analyze the breakdown of the scope of work carried out by each major company in the market
- Arriving at the market estimates through country-wise analysis of optical transceiver companies; thereafter, combining country-wise data to arrive at the market estimates by region
- Verifying and cross-checking the estimates at every level via discussions with key opinion leaders, including CXOs, directors, and operation managers, and, finally, with the domain experts at MarketsandMarkets
- Studying various paid and unpaid sources of information, such as annual reports, press releases, white papers, and databases, for this process
Market Size Estimation Methodology-Bottom-Up Approach
Market Size Estimation Methodology-Top-Down Approach
Data Triangulation
After arriving at the overall market size from the estimation process explained above, the total market was split into several segments and subsegments. To complete the overall market engineering process and arrive at the exact statistics for all the segments and subsegments, data triangulation and market breakdown procedures were employed, wherever applicable. The data was triangulated by studying various factors and trends from both the demand and supply sides. The market has also been validated using both top-down and bottom-up approaches.
Market Definition
An optical transceiver is a device that uses fiber optical technology to send and receive data. This device comprises a transmitter and a receiver, which are combined and share common circuitry or a single housing. The transceiver is an important part of a fiber-optic network. It converts electrical signals to light signals to transmit data through an optical cable and vice versa. Manufacturers need to obtain ISO 9001 certifications to ensure that their optical transceivers are good quality.
Stakeholders
- Original equipment manufacturers (OEMs)
- Providers of technology solutions
- Research institutes
- Market research & consulting firms
- Forums, alliances, and associations related to optical transceivers
- Technology investors
- Governments & financial institutions
- Analysts & strategic business planners
- Existing end users and prospective ones
Research Objectives
- To describe and forecast the optical transceiver market, in terms of value, based on form factor, data rate, wavelength, fiber type, connector, distance, protocol, and application
- To describe and forecast the optical transceiver market, in terms of volume, based on data rate
- To describe and forecast the optical transceiver market size, in terms of value, with respect to four main regions: North America, Europe, Asia Pacific, and the Rest of the World (RoW)
- To provide detailed information regarding the drivers, restraints, opportunities, and challenges influencing the growth of the optical transceiver market
- To provide a detailed overview of the supply chain of the optical transceiver ecosystem
- To strategically analyze the micromarkets1 with respect to individual growth trends, prospects, and contributions to the overall market
- To analyze the opportunities in the market for various stakeholders by identifying the high-growth segments of the market
- To benchmark the market players using the proprietary company evaluation matrix framework, which analyzes market players on various parameters within the broad categories of market ranking/share and product portfolio
- To strategically profile the key players and comprehensively analyze their market positions in terms of ranking and core competencies2, along with a detailed competitive landscape of the market
- To analyze competitive developments, such as acquisitions, product launches, partnerships, expansions, and collaborations, undertaken in the optical transceiver market
Available Customizations:
MarketsandMarkets offers the following customizations for this market report:
- Further breakdown of the market in different regions to the country-level
- Detailed analysis and profiling of additional market players (up to 5)
Generating Response ...
Growth opportunities and latent adjacency in Optical Transceiver Market
I'm interesting about the tunable DWDM Optical Transceiver Markets and expectations while 5G wireless network environment. Has this been considered? How would 5G impact the use of optical transiver market?
The key players in the optical transceiver market are 1. Finisar Corp. (U.S.), 2. Accelink Technologies Co., Ltd. (China), 3. Lumentum Holdings Inc. (U.S.), 4. Oclaro, Inc. (U.S.), 5. Sumitomo Electric Industries, Ltd. (Japan), 6. Foxconn Electronics Inc. (Taiwan), 7. NeoPhotonics Corp. (U.S.), 8. Fujitsu Optical Components Ltd. (Japan), 9. Reflex Photonics Inc. (Canada), and Source 10. Photonics Inc. (U.S.), among others. Which other players have you considered? How smartphones would impact the overall offerings of this market?
We would like to know the market research of the optical transceiver. Have you considered the market by data ranges and data rates?
Looking for market research on optical transceiver market broken down by speed and industry vertical. Which are the major industries apart from telecom sector? How 5G impact the further adoption of optical transivers?
We are going to develop connector in optical fiber industry. Can you provide us with the market scope of the same? Has connectors been included in the scope of the study?
I am interested in a Optical Receiver / GBIC break down ... Esp. problems with GBIC counter fits (or use of non-compliant GBIC modules in service contracts) and the resulting financial damage. Is this a major restraining factor for the Optical Transceiver Market?