Sales of optical transceivers  reached around $7.7 billion in 2019 and are expected to more than double to around $17.7 billion by 2025 at a CAGR for 2019-2025 of 15%, says  Yole Développement (Yole).

Sales of optical transceivers  reached around $7.7 billion in 2019 and are expected to more than double to around $17.7 billion by 2025 at a CAGR for 2019-2025 of 15%, says  Yole Développement (Yole).

The growth will be driven by the adoption of  high data rate, including 400G and 800G, modules by big cloud service operators. 

As these invest in new datacentres, and telecoms operators increase their investments in 5G networks that use wireless optical transceivers, the market will be driven higher

High demand from datacentre and telecom operators have been confirmed as follows: 

• The datacom market growth, about 20% CAGR between 2019 and 2025, will be driven by the adoption of expensive higher data rate optical modules which migrate from core/spine networks down to inter-rack connections. 

• The revenue growth of telecom optical modules will be driven by coherent technologies for DCI optical transport solutions and 5G optical transceivers deployment in Asia. Yole’s analysts announce 5% CAGR during this period. 

Whereas the highest capacity of commercial fibre-optic links available in the 1990s was only 2.5-10 Gb/s while today they can carry up to 800 Gb/s. 

The evolution of multiple technologies has enabled transmission speed of 400G and beyond in long haul and metro networks. 

Today’s migration to 400G speeds stem from cloud operators’ demand to interconnect data centres. 

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 multi-level modulation techniques such as PAM4 or QAM. 

Another technique to increase data rates is parallelization or multiplexing that enables increasing capacity using parallel fibers or different wavelengths onto a single fiber”.

Progress in integration of optical component technologies has led to dramatic reductions in complexity and cost of optical transceivers. The growth in bandwidth has yielded a 10 to 100-fold decrease in cost per transmitted bit.