Growth of Global Optical Transceiver Market expected to be at $22.6 billion in 2023

According to the market research on the Optical Transceiver Market by Form Factor (SFF, SFP, QSFP, CFP, XFP, and CXP), Data Rate (1G, 10G, 40G, and 100G, 400G), Distance, Wavelength (850nm, 1310nm, and 1550nm), Application (Telecom, Data Center, and Enterprise), & Geography, the optical transceiver market is expected to be valued at USD 22.6 Billion by 2023, growing at a CAGR of 13.5% between 2016 and 2023. The most significant factor driving the optical transceiver market is the increasing Internet penetration and data traffic. Growing demand for smartphones and other connecting devices and mainstream adoption of cloud computing are the other factors driving the growth of the optical transceiver market.

The QSFP, QSFP+, QSFP14, and QSFP28 form factor, though expected to grow at rate less than few other transceivers, accounted for the largest share of the optical transceiver market 2016. This is mainly because these transceivers are perfect for major transceiver applications such as high-density signal transmission in data centers, high-performance computing, high-speed data processing, and VoIP, among others.

The SFP+ and SFP28 transceivers are expected to grow at the highest rate during the forecast period. This can be attributed to the high market size of SFP+ and SFP28 transceivers in terms of volume in 2016, along with major applicability in increasing the versatility of the network used for many applications such as data centers, cloud computing, and others.

The global optical transceivers market has witnessed significant growth in recent years due to the rapid adoption of IT-based solutions across various applications. The need for storage, processing, and data transfer capacity of data communication & telecommunication network is rising exponentially. This creates a huge demand for switches and transceivers, particularly optical transceivers with high data transfer rate.

Few of the prominent trends accelerating the growth include a continuous shift of large-scale data centers to 100GbE and higher infrastructure to cater the growing bandwidth requirements, data center architectures are shifting from traditional 3-tier tree network to 2-tier leaf-spine network, and large enterprises maintaining their IT infrastructure in commercial spaces are continuously migrating to third-party datacenters to reduce the operating cost.

Technologies like cloud computing have brought with them a storm of global data traffic, eating up large bandwidths demanded by applications such as video streams and online gaming. Studies show up to a 25-percent annual increase in data center interconnect applications, and this significantly high demand for data processing, computation and storage in data centers calls for increasingly high-speed optical transceivers to support growing data centers. Although 100G and 200G optical interconnects are widely used at present, 400G optical transceivers are expected to be a fundamental element in near future for both inter- and intra-Datacenter communications.

Next-generation optical transceivers such as 400G, 800G or even 1.6T interconnects promise to use less power and be less expensive, smarter and smaller. To home in on how different designs of 400G transceivers would affect device cost and power consumption, and how these cost differences would eventually influence the cost of Datacenter networks, an international research team from Greece, Luxemburg and Spain have analyzed and compared the cost and power consumption of different 400G transceivers, and for the first time predicted each transceiver’s cost reduction trend over the next five years using a mathematical model. The researchers further evaluated the cost and power consumption of constructing and upgrading the datacenter based on Facebook’s Fabric architecture using different transceiver-installation technologies, providing cost-effective and power-efficient connectivity solutions for different sizes of Data centers.

The vendors in the 400G optical transceivers industry have invested in high-quality technology and processes to develop leading edge broadband network capability a being implemented in the mega data centers. 400G optical transceivers market driving forces relate primarily to the implementation of networks within the mega data centers and the interconnects between the data centers.

High-speed serial transceivers form the backbone of networks. Communications, servers and many other electronic systems depend on high-speed serial transceivers. Global adoption of the Internet is driving rapid growth of the mega datacenter. Data centers support online commerce, streaming video, social networking, and cloud services. Software as a Service (SaaS) is a primary offering.

The shift has been away from utilizing discrete optical components to leveraging the design and pay-as-you-grow flexibility offered by pluggable modules. 400G Optical transceiver products are compliant with Ethernet, Fibre Channel, SONET/SDH/OTN and PON standards. They generally operate at data rates of 400 Gb/s and higher.

400G Transmitter / Transceivers are capable of distances ranging from very short reach within a datacenter to campus, access, metro, and long-haul reaches. They feature outstanding performance. Units work over extended voltage and temperature ranges. They are positioned to minimize jitter, electromagnetic interference (EMI) and power dissipation.

Mega Datacenter Online Commerce, Streaming Video, Social Networking, And Cloud Services are key to operations of mega data centers.

Global adoption of online commerce, streaming video, social networking, and cloud services such as Software as a Service (SaaS) is driving rapid growth of the mega datacenter. The storage and computing requirements supported by the datacenters present new challenges to connectivity within the datacenter in terms of bandwidth, transmission distance, power consumption, and cost.

The product portfolio offered by vendors for telecom and datacenter and cloud applications effectively address these requirements and challenges.

Covering data rates up to 400Gb/s in compact form factors, vendor products enable green field deployments and the upgrade of existing datacenters in a cost-effective manner. WAN telco applications.

Internet, enterprise augmented reality, and IoT Drive optical network adoption as the mega data centers are poised for significant growth to support trillion-dollar app markets. Global adoption of the Internet is driving rapid growth of the mega datacenter and the need for very high speed network transmission. Optical transceivers are used to upgrade telecommunications networks and launch very large mega data centers. The development of innovative products is essential to keeping and growing market share.

A 400G optical transceiver is a single, packaged device that works as a transmitter and receiver. An optical transceiver is used in an optical network to convert electrical signals to optical signals and optical signals to electrical signals. Optical transceivers are widely deployed in optical networking for broadband. Optical transceiver manufacturers test to ensure that their optical transceivers have compliance with the defined specifications. Testing of key optical parameters: transmitter optical power and receiver sensitivity is a big deal.

In addition to high performance, 400G transceivers also must support low cost per bit and the ability to reliably and efficiently scale to high-volume manufacturing. This has driven innovation in transceiver component design with a focus on leveraging the advantages of integration, automation, wafer-scale production, and non-hermetic packaging.

Such innovation is apparent in the receive optical subassembly (ROSA) and the transmit optical sub-assembly (TOSA). The cost of TOSAs and ROSAs is driven by the assembly of discrete components, alignment, burn in, and high cost of yield loss at the subassembly/module level. To address this, new TOSA and ROSA designs are emerging that leverage the use of wafer-level integration in assembly, packaging, and testing, based on both silicon photonics and complementary techniques within indium phosphide (InP).

Silicon photonics offers the use of mature, large-scale processes compatible with complementary metal–oxide–semiconductor (CMOS) technology, today’s standard for building integrated circuits, to precisely generate thousands of optical components on a monolithic substrate in a fully automated manufacturing environment. Enabled elements include optical waveguides, splitters, couplers, modulators, detectors, multiplexers, and demultiplexers.

In practice, silicon photonics components are defined through CMOS processes that involve lithographic patterning, material deposition, removal, and modification. These processes are repeated to build up the desired structure of the optical components and circuitry. Once complete, the wafer containing a patterned grid of devices can be burned in and tested before singulation. Testing at this comparatively earlier, lower cost point in the manufacturing process improves yield versus conventional photonic device manufacture.

Historically TOSA/ROSAs have been hermetically sealed to protect materials and free-space optics from environmental contamination that could reduce performance and reliability. Sealing is a time consuming and expensive process. Silicon is "self-hermetic" and therefore does not require hermetic packaging. This attribute greatly reduces the constraints on the design, materials used, and fabrication complexity required to build optical subassembly (OSA) packages.

Some materials, including InP, will still need hermetic protection. But there are several ways to achieve this cost-effectively on a chip or wafer level that preserves wafer-level packaging and test. As a result, such OSAs use less material, require fewer process and test steps, and produce higher yields through final assembly and burn-in, all of which results in lower cost.

Silicon photonics OSAs also can be made small enough to be assembled into smaller transceiver form factors that can increase faceplate density. Figure below illustrates an example of the evolution of hermetically sealed TOSAs and ROSAs to InP and silicon photonics based optics.

According to the the research; “400G Optical transceiver markets are driven by the use of mega data centers that implement broadband networks in cloud computing environments. Video, Internet adoption, and tablets drive demand for broadband mega data centers. Markets are influenced by apps, augmented reality. IoT, the move to cloud computing and the adoption of smart phones by 9.5 billion people by 2020. Mega data centers that support online commerce, streaming video, social networking, and cloud services for every industry are expected to adopt 400G optical transceivers as a fundamental technology. Software as a Service (SaaS) is a primary offering that will leverage 400 G optical transceivers in the mega data center.”

High-speed serial transceivers form the backbone of networks. Communications, servers and many other electronic systems depend on high-speed serial transceivers. Global adoption of the Internet is driving rapid growth of the mega datacenter. Data centers support online commerce, streaming video, social networking, and cloud services.

Leading vendors offer a broad product selection. They are positioned with innovative technology. 400 G optical module manufacturers address the needs of major networking interconnect equipment vendors and companies building mega data centers. Leading vendors have taken a leading role in transforming the data communications and tele-communications equipment market.

The global 400G optical transceiver market is expected to be at $22.6 billion in 2023 driven by the availability and cost effectiveness of 100 Gbps, and 400 Gbps devices. Next generation optical transceiver devices use less power, are less expensive, and are smarter and smaller. The adoption of widespread use of the 100 Gbps devices, followed by 400 Gbps devices and the vast increases in Internet traffic are core to helping manage change in the large mega data center and communications interconnect and infrastructure markets.

Shiv Sharma
CEO - Syrotech Networks Ltd.