LightCounting, an optical communications market research organization, pointed out that by 2025, 800G Ethernet optical modules will dominate this market.
LightCounting pointed out that the world’s top 5 cloud vendors, Alibaba, Amazon, Facebook, Google, and Microsoft, will spend US$1.4 billion on Ethernet optical modules in 2020, and their spending will increase to more than US$3 billion by 2026.
800G optical modules will dominate this market segment from the end of 2025, as shown in the figure below. In addition, Google plans to start deploying 1.6T modules in 4-5 years. Co-Packaged optics will replace pluggable optical modules in cloud data centers from 2024 to 2026.
optical communications market
LightCounting said that the following three factors contributed to the increase in sales forecasts for Ethernet optical modules.
·According to the latest data shared by Google on OFC in 2021, the prospects for data traffic growth driven by artificial intelligence applications are optimistic.
· 800G Ethernet optical modules and component suppliers supporting these modules are progressing smoothly.
The demand for bandwidth of data center clusters is higher than expected, mainly relying on DWDM.
Google’s latest data on traffic growth in its network shows that conventional server traffic has grown by 40%, and traffic supporting machine learning (ML) applications has grown by 55-60%. More importantly, AI traffic (such as ML) accounts for more than 50% of its total data center traffic. This forced LightCounting to raise the assumption of the future growth rate of data center traffic by a few percentage points, which had a significant impact on market forecasts.
LightCounting pointed out that the demand for network bandwidth connecting data center clusters continues to be surprising. Since the cluster connection ranges from 2 kilometers to 70 kilometers, it is difficult to track the deployment of optical modules, but our estimation is improved in the latest prediction model. This analysis explains why Amazon and Microsoft are eager to see 400ZR modules now in production, and 800ZR modules in 2023/2024.
