The optical interconnect market is projected to grow from USD 9.0 billion in 2020 to USD 17.1 billion by 2025; it is expected to grow at a CAGR of 13.7% from 2020 to 2025. Key factors fueling the growth of this market include the rise in the global deployment of datacenters and the surge in the global adoption of cloud computing, big data analytics, and IoT.
The multimode fiber segment of the optical interconnect market expected to grow at a higher CAGR than the single mode segment during the forecast period.
The multimode fiber segment of the market is projected to grow at a higher CAGR than the single mode fiber segment from 2020 to 2025. The growth of this segment can be attributed to the rising demand for increased bandwidth for cloud computing applications. Multimode fiber optical interconnects are used for short-distance data transmissions in datacenters and high-performance computing applications. Moreover, cloud computing offers a large number of benefits, such as reduced infrastructure costs and improved connectivity, thereby leading to its increased adoption rate globally. The increasing use of cloud computing has created the requirement for high-efficiency processing in datacenters.
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The 41 Gbps to 100 Gbps data rate segment projected to grow at the highest CAGR from 2020 to 2025.
The 41 Gbps to 100 Gbps segment of the market is projected to grow at the highest CAGR during the forecast period. This growth can be attributed to the rising demand for high data transmission rate 100G, 200G, and 400G transceivers. With the advent of advanced technologies such as AI and 5G, there is an increased requirement of high bandwidth, which is necessary for datacenters. Thus, optical interconnects are becoming highly predominant for key cloud service providers such as Amazon, Facebook, Google, and Microsoft, thereby leading to the growth of the market during the forecast period.
The less than 1 km distance segment projected to grow at the highest CAGR from 2020 to 2025.
In 2019, the less than 1 km segment held the largest share of the optical interconnect market. This segment is expected to lead the market during the forecast period. The growth of the less than 1 km segment can be attributed to the transitioning of large-scale datacenters toward the adoption of high data rate components, including optical interconnects for data communication. Datacenters transmit data over short distances and require a high data transmission rate for transferring huge packets of information. The increasing requirement of high-speed communication in datacenters is also driving the market for high data rate optical interconnects such as 100G and 400G for a distance of less than 1 km.
The data communication application segment to lead the optical interconnect market during the forecast period.
The data communication segment is projected to lead the optical interconnect market from 2020 to 2025. The growth of this segment can be attributed to the ongoing adoption of cloud storage and the increasing technological developments taking place in the field of machine learning, artificial intelligence, and deep learning. This, in turn, increases data traffic across networks, thereby leading to significant demand for high data rate transceivers used for efficient data communication. The development of hyperscale datacenters globally is also driving the growth of the optical interconnect market. Moreover, leading cloud service providers such as Google, Amazon, and Microsoft are implementing high data rate optical interconnects in their datacenters. The advent of driverless vehicles, wireless communication, smart gaming, etc., is also expected to increase data traffic across networks, thereby leading to a rise in demand for optical interconnects.
North America accounted for the largest share of the optical interconnect market in 2019.
In 2019, North America held the largest share of the overall optical interconnect market. The growth of the market in North America can be attributed to the presence of some leading datacenter companies such as Microsoft, Google, Amazon, Facebook, and Apple in the US. These companies have a large number of hyperscale datacenters installed across the region, thereby contributing significantly to the growth of the optical interconnect market in North America.
Key Market Players
II-VI Incorporated (US); Lumentum Operations LLC (US); Molex, LLC (US); InnoLight Technology (Suzhou) Ltd. (China); NVIDIA Corporation (US); Fujitsu Ltd. (Japan); Sumitomo Electric Industries, Ltd. (Japan); Broadcom Inc. (US); TE Connectivity (Switzerland); and Infinera Corporation (US) are a few major companies operating in the optical interconnect market. These companies have adopted both organic and inorganic growth strategies such as new product launches and developments, acquisitions, collaborations, contracts, and expansions to strengthen their position in the market.