The global Optical Interconnect Market size is forecasted to reach $17.5 billion by 2027, growing at a CAGR of 8.46% during the forecast period from 2022-2027. Globally, growing adoption of cloud computing across organizations to increase business efficiency is set to drive the Optical Interconnect market. As demand for high speed and large capacity communications increases, optical interconnect technology based on silicon photonics has become an emerging technology for solving the bandwidth problems can be considered as a major factor driving the market growth of Optical Interconnect Market. Presently, optical interconnects are used in data centers and broadband telecommunication networks can also considered as a factor influencing the market growth. Furthermore, Fiber network cables are physically connected to optical transceivers coupled with integrated lasers and detectors which have the capability of transmitting as well as receiving an optical signal. Such Embedded optical transceivers and transceiver modules coupled with Reflex Photonics technology can be used for advancing optical interconnect based solutions. Such factors can be considered vital in boosting the market growth of Optical Interconnect during the forecast period 2022-2027.
Optical Interconnect Market Segment Analysis-ByCable Type
Based on cable type, the Optical Interconnect market is segmented into Single-Mode and Multi-Mode. Multi-mode analyzed to witness the fastest growth with the highest CAGR of 9.25%during the forecast period 2022-2027, owing to rapid adoption of cloud computing and growing shift of cloud-based data management. Compared to single mode cable, multi mode fiber cable provides higher bandwidth at rapid speed over medium distances at lesser cost, thus raising its adoptability among data centers. Multi mode fiber cables are used for various applications such as data communications, broadcasting, military and healthcare purposes which increases the rate of adoption among industries. Furthermore, technological advancement in fiber optical cable can be a key factor in driving the growth of this segment. Such trends are set to drive its market growth in the long run.
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Optical Interconnect Market Segment Analysis-By Applications
Based on applications, Data communications dominated the Optical Interconnect market with a share of 9.48% in 2021 and is also anticipated to witness significant growth during 2022-2027, owing to growth of cloud computing applications and rise in number of data centers. Optical interconnects are used as an attractive solution for accelerating bandwidth while reducing density and power consumption in high performance data communication systems, thus raising its adoptability. As per IEEE Communications Society survey in 2019, optical networks could provide up to75% energy savings in the data centers. Large data centers has significant interest in disposition of optical interconnect due to its high bandwidth and low latency. Such factors can be considered vital in boosting the market growth of optical interconnects in the long run.
Optical Interconnect Market Segment Analysis-By Geography
North America region accounted for the largest share of 36% in the global Optical Interconnect Market and is anticipated to have a significant growth during the forecast period the forecast period 2022-2027, owing to growing shift towards cloud computing or cloud-based environments. As per Cisco Systems Report, the cloud traffic is estimated to reach around 6844 Exabyte in 2021in North America, compared to other regions in the world. Such fact is vital for creating scope for the market. Moreover, high investment on adopting high data rate optical interconnect in data centers from some of the major market players in the region such as Google LLC, Amazon, Microsoft Corporation and others along with availability of technical expertise have also helped in aiding the market growth overtime. For instance in March 2021, Microsoft Corporation announced to invest $200 million in building two data centers outside of Chicago to provide faster access as well as wider range of Azure cloud services in the region. Such building up of new data centers increases the demand for optical interconnect for faster transmission of data, thus raising its adoptability. Furthermore, rising demand for Optical fiber cable from IT & telecommunication sector, increasing penetration of mobile devices and rising adoption of FTTH connectivity are some of the factors that influence the market growth.
Optical Interconnect Market Drivers
Growing demand for undersea telecommunication system is considered to be a factor that can drive the market forward.
Rising demand for undersea telecommunication system is considered to be a major driver for the growth of global optical interconnect market. Optical interconnect technology helps in receiving signals from network equipment and perform signal processing by converting digital signals to optical signals for transmission in the fiber network. The growing popularity of next-generation undersea transmission systems for faster data transmission has accelerated the demand for fiber optical interconnects to reduce the concerns such as cable damage by sharks and ship anchors. Moreover, increasing investments in next-gen undersea telecommunication systems will also increase the demand for optical interconnects. In February 2020, Facebook and global telecom majors China Mobile Ltd. and MTN Group Ltd collaborated and decided to invest $1 billion in expansion of next generation undersea telecommunication in Africa to provide faster internet connections to the African continent. Such investments can positively influence the demand for optical interconnect for reducing the damage in the long run.
Rising number of data centers can drive the market forward
Rising number of data centers across the world for purposes of storing, processing and disseminating data is set to be one of the factors that can drive the market forward during the forecast period 2022-2027.Data centers require reliable and higher bandwidth that can support to preserve the value of network’s physical infrastructure.Optical interconnects technology has emerged as the successor to electrical interconnects to address future needs for the transfer of large volume of data volumes in continuously growing data centers as well as high-end computing systems. Additionally, high investment in establishing data centers will create opportunities for the growth of the market.For instance in February 2021, Amazon India announced to invest $1.6 Billion in construction of two data centers in Hyderabad. Similarly In June 2020, Oracle Corporation planned an investment on construction of second data center in Hyderabadto offer faster access and wider range of cloud services in the region. Such investments can increase the implementation of optical interconnect technology in data centers for the need of higher bandwidth, which can influence the market growth of Optical Interconnect in the long run.
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Optical Interconnect Market Challenges
High initial investments associated with optical interconnect hamper the market growth.
Though optical interconnect have lot of advantages but high initial investment associated with optical interconnect has become a prime concern for every organization which acts as a major challenge restraining the growth of Optical Interconnect Market. The cost of implementing optical interconnect is quite expensive. Budget is the most important thing considered while organizations investing in advanced tools & technologies. Owing to the above mentioned factor, use of optical interconnect technology will be significantly impacted, thus hampering its market growth.
Optical Interconnect Industry Outlook
Partnership, Acquisitions, Collaboration, technology launches and R&D activities are key strategies adopted by players in the Optical Interconnect Market. The Optical Interconnect Market top 10 companies include :
II-VI Incorporated
Lumentum Operations LLC
Molex LLC
NVIDIA Corporation
TE Connectivity
Amphenol Corporation
Broadcom Inc.
Sumitomo Electric Industries, Ltd.
Juniper Networks, Inc.
Fujitsu Ltd.
Recent Developments
In November 2021, Lumentum Operations LLC announced to acquire NeoPhotonics Corporation. Through this acquisition, Lumentum will able to provide its optical components in fastest growing applications market such as cloud and telecommunication infrastructure to boost network speed and scalability. Such acquisitions will influence the growth of the market.
In September, 2021, TE Connectivity (TE), a global leader in connectivity and sensors, introduced the NanoRF Edge Launch connector to offer easy and standardized interface with VPX plug-in computing modules. This connector is the only solutions that can combine the RF with optical interconnect for military and radar RF embedded computing application, thus influencing the market growth positively.
In November 2020, Sterlite Technologies announced the acquisition of OptotecS.p. A, a leading provider of Optical Interconnect Products based in Italy. Through this acquisition, the companies will able to provide wide range of Optical Interconnect Products for Telecommunication, FTTH and Cloud Networks to customers across Europe, India and the Middle East. Such acquisitions will influence the growth of the market.
Key Takeaways
Multi-mode cable is analyzed to witness the fastest growth with the highest CAGR of 9.25%, owing to growing shift of cloud-based data management.
Data communications is the fastest growing segment in Optical Interconnect Market and is estimated to grow at around CAGR 9.48% during the forecast period, owing to growth of cloud computing applications and rise in number of data centers.
North America Optical Interconnect Market held the largest share in 2021; owing to factor such as high investment on adopting high data rate optical interconnect in data centers from major market players in the region like Google LLC, Amazon and others.
Growing adoption of Cloud computing across organizations and rising number of data centers across the world are analyzed to significantly drive the global Optical Interconnect market during the forecast period 2022-2027.
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