The demand for high-speed datacom and telecom optical modules reached unprecedented levels in the first quarter of 2024, driven by applications in AI and traditional computing, as reported by Cignal AI. Insights from the Optical Components Report reveal significant growth in shipment volumes and revenue across the datacom and telecom sectors, with implications for market dynamics and future outlooks.
Record Levels of Demand for Datacom Optical Modules in Early 2024
Boston—13 June 2024—The demand for high-speed datacom and telecom optical modules surged to unprecedented levels in the first quarter of 2024, driven largely by hyperscale network operators. This rise, significantly fuelled by applications in artificial intelligence and traditional computing, has been documented in detail by research firm Cignal AI.
According to Cignal AI’s latest Optical Components Report, more than 3 million high-speed datacom modules were shipped within the quarter. Scott Wilkinson, Lead Analyst at Cignal AI, noted an extraordinary increase in the shipment of 800GbE modules, stating that “nearly as many 800GbE modules shipped in 1Q24 as in all of 2023.” This spike in demand is anticipated to lead to a doubling of datacom segment revenue throughout 2024.
Key Findings from 1Q24
One of the pivotal observations from the report is that spending on datacom optical components increased by over 90% year-over-year. The surge was specifically notable in the context of AI applications, with 400GbE and 800GbE modules seeing exceptional demand. Overall, combined unit shipments of these modules rose by more than 25% quarter-over-quarter. In the vendor landscape, Innolight emerged as the leading provider of datacom modules.
On the telecom front, the growth was largely concentrated in 400G coherent pluggables, which saw a gain of over 35% year-on-year. Companies such as Marvell and Acacia reported significant growth in their shipment volumes. However, telecom components outside of pluggable coherent modules did not fare as well, with this segment’s revenue declining by 26% year-over-year.
The report also highlighted the coherent module market size, which had fallen to under $5 billion in 2023. However, it forecasts growth in the coming years, expecting the market to approach $10 billion by 2028.
Live Presentation and Report Accessibility
The findings from Cignal AI’s Optical Components Report are presented live each quarter by Lead Analyst Scott Wilkinson. The next presentation is scheduled for 18 June at 11 AM ET and is open to registered clients. These live sessions offer a deeper dive into the statistics and trends that the report carries.
About the Report and Market Coverage
Cignal AI’s Optical Components Report is a quarterly publication that outlines the market share based on revenue in four optical component markets: Datacom, Telecom, Industrial, and Consumer. The report gives a detailed account of unit shipments, including 400GbE/800GbE/1.6TbE Datacom transceivers and pluggable as well as embedded coherent transceivers for telecom applications. It also includes a five-year forecast for revenue and unit shipments.
The report covers an extensive list of companies, including notable names such as Acacia, Cisco, Huawei, and Intel, among others. Beyond providing figures, the report aims to give a nuanced view of market dynamics, methodologies, and future outlooks.
Context and Implications
The skyrocketing demand for high-speed optical modules indicates a significant development in global data infrastructure, influenced heavily by the expansion of AI capabilities and the ongoing need for more robust and rapid computing resources. As hyperscale data centres continue to proliferate, the suppliers of these essential components stand to see substantial gains.
However, the supply chain constraints and the gap between demand and vendor capabilities also spotlight the potential challenges that could arise. Addressing these might require innovation in manufacturing processes, improved logistical frameworks, and possibly more participants entering the market to balance the scales.
The figures presented in the report underscore a transformative phase in digital infrastructure, with implications not just for tech giants but also for broader economic and societal shifts driven by AI and data-centric technologies.
