LightTrends Newsletter

LightCounting updates the forecast for the global optical transceiver market.

The market outlook for 2023-2024 was really gloomy a year ago. Nvidia boosted industry morale by reporting huge growth in sales of AI hardware, including optical interconnects, in April-May 2023. Google increased its plans for investments in AI Clusters soon after that, and many other Cloud companies followed. All of a sudden, expectations for sales of 400G and 800G Ethernet transceivers in 2023-2024 turned sky high. Yet, the demand for many other products remains weak.

The Figure below illustrates how uneven the recovery is across different segments of the global optical transceiver market. Sales of FTTx and Wireless Fronthaul optics declined the most in 2023 and we do not expect a recovery in these segments until 2025. The DWDM market should see a modest recovery in 2024, while sales of Ethernet transceivers and AOCs are projected to ramp by 40% and 25%, respectively.

The global transceiver market is projected to expand at a 15% CAGR over the next 5 years, after a 6% decline in 2023. Strong demand for Ethernet transceivers for applications in AI Clusters will be the primary growth factor. Upgrades to DWDM networks operated by Cloud companies will also make a significant contribution to the total. The impact of all other segments will be marginal, despite significant growth in sales of wireless fronthaul and FTTx products in 2025-2029.

This report provides a detailed market demand forecast through 2029 for optical transceivers and a few related products used in Ethernet, Fibre Channel, CWDM/DWDM, wireless infrastructure, FTTx, Cloud datacenter and AI Cluster applications.

The report is available to subscribers at: https://www.lightcounting.com/login