800G Ethernet Transceivers will Eclipse Sales of Lower Speed Modules by 2025
LightCounting releases 2021 Mega Datacenter Optics Report
The Top 5 Cloud companies: Alibaba, Amazon, Facebook, Google, and Microsoft spent $1.4 billion on Ethernet transceivers in 2020, and their spending will increase to more than $3 billion by 2026. 800G transceiver will dominate this market segment by the end of the forecast period, as illustrated in the figure below. Google plans to start deployments of 1.6T modules 4-5 years from now, but these are not included in this forecast. The latest Mega Datacenter Optics Report does include projections for sales of Co-Packaged optics, which will start replacing pluggable optics in Cloud datacenters in 2024-2026.
Several factors contributed to the increased forecast for the sale of optics to Cloud companies:
Google’s latest data on traffic growth in their networks shows 40% growth for regular server traffic and 55-60% growth in traffic supporting machine learning (ML) applications. More importantly, AI traffic (such as ML) accounts for more than 50% of the total traffic in their datacenters. This forced us to raise assumptions for future growth rate in datacenter traffic by a few percentage points, which had a significant impact on the market forecast.
Demand for bandwidth in networks interconnecting clusters of datacenters continues to surprise us. It is hard to track deployments of optics since the reach of cluster connections ranges from 2km to 70km, but we improved our estimates in the latest forecast model. This analysis explains why Amazon and Microsoft are eager to see 400ZR modules in production now, and 800ZR in 2023/2024.
This report analyzes the impact of Mega Datacenters on the market for Ethernet optical transceivers, DWDM optics, Active Optical Cables (AOCs), Embedded Optical Modules (EOMs), and Co-Packaged Optics (CPO). It leverages extensive historical data on shipments of these products, combined with market analyst research, to make projections for the market in 2021-2026. The report offers a comprehensive forecast for more than 50 product categories, including 10GbE, 40GbE, 100GbE, 200GbE, 2x200GbE, 400GbE, and 2x400GbE transceivers, sorted by reach, form factors, and segmented into three main applications: telecom, enterprise, and cloud. It provides historical shipments data and projections for 2.5G, 10G, 100G, 200G, 400G, and 600/800G DWDM ports, several types of AOCs/EOMs, and CPO.
More information on the report is available at: https://www.lightcounting.com/report/july-2021-mega-datacenter-optics-report-104.