The optical transceiver market is expected to grow from USD 7.0 billion in 2021 to USD 14.3 billion by 2026, at a CAGR of 15.2% during the forecast period. The increase in internet data traffic and rising demand for smartphones and other smart gadgets are driving the growth of cloud-based services, hence increasing opportunities for the optical transceiver market. This is mainly due to the assured reliability cloud computing provides as compared to in-house servers. The advent of cloud computing has generated new business capabilities and opportunities for enterprises. With the help of cloud-based services such as software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS), small enterprises and consumers can subscribe to a range of services by replacing locally housed computing solutions.
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XR optics are a new class of pluggable solutions that enable a single laser to be divided into independently routable data streams using Nyquist subcarriers, resulting in the industry's first point-to-multipoint coherent optical subcarrier aggregation technology optimized for hub-and-spoke traffic patterns. This enables network operators to create more efficient, flexible, and cost-effective transport networks that are optimized for the applications that drive network growth. In February 2020, Infinera (US) and Lumentum (US) announced a collaboration to bring XR optics-based networking solutions to market. XR optics enables significantly more efficient and cost-effective solutions to the transport networking challenges that operators face when delivering new 5G, enhanced broadband, and cloud-based business services.
XR optics, which incorporates the industry's first point-to-multipoint coherent optical aggregation technology, is intended to disrupt optical networking economics by enabling new transport architectures. It is powered by Infinera's low-power DSP technology, which uses routable Nyquist subcarriers to allow a single high-speed transceiver to send and receive independent data streams to and from multiple low-speed transceivers. All optical networks are mostly built on a foundation of bookended point-to-point optical links. Many networks, particularly metro networks, have point-to-multipoint traffic flow, with connectivity between a group of lower-capacity sites and a smaller number of higher-capacity hub sites. XR optics technology is specifically designed to address this asymmetry.
The data center application accounted for the largest share of the market in 2020 and is expected to dominate the market throughout the forecast period. This growth in the market is due to factors such as transition toward cloud storage and increasing technological developments, including machine learning, artificial intelligence, and deep learning, which, in turn, increase the data traffic across networks, which create demand for high data rate transceivers for efficient data communication. The development of hyperscale data centers also drives the demand for high data rate optical transceivers, such as 100G, 200G, 400G, and 800G, for channeling huge packets of information in a shorter span. Moreover, the technological initiatives by big telecommunication giants for the implementation of the 5G networks in APAC regions is further expected to fuel the demand of optical transceivers.
The key players in the optical transceiver market include II-VI (US), Broadcom (US), Lumentum (US), Sumitomo Electric industries (Japan), Accelink (China), Smartoptics (Norway), Infinera (US), Fujitsu optical Components (Japan), Hisense Broadband (China), Huawei (China), Innolight (China), Ciena (US), Mellanox (US) (the company was acquired by Nvidia in April 2020), Applied Optoelectronics (US), Amphenol (US), Intel (US), NEC (Japan), Cisco (US), NeoPhotonics (US), Perle Systems (Canada), FOCI (Taiwan), Source Photonics (US), Solid Optics (US), Eoptolink (China), and Reflex Photonic (Canada) (the company was acquired by Smiths Interconnect (US) in November 2019). uSenlight (Taiwan), and Precision Optical Transceivers (US), POET Technologies (US), ProLabs (US), Elenion Technologies (US), HRB Technologies (India), and Alpine Optoelectronics (China) are few startup companies that provide such type of transceivers.
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