100G & 400G Optical Transceiver Marketing

NADDOD Edward Jan 17, 2023

The digital communication market for optical modules is changing from generation to generation, the demand for 100G is recovering, and 400G is ready to go.

There are two main application fields of optical modules. One is the telecommunications market, such as the 5G field that is currently under construction, and the other is the data communication market, that is, data center information transmission.

It is worth noting that due to the increase in traffic and speed brought by the 5G network, the requirements for the speed of optical modules will also increase accordingly. The wireless fronthaul part will be upgraded from 10G to 25G, the metropolitan area network will be upgraded from 100G upgrade to 400G. In addition, with the rise of cloud computing and edge computing driving the construction of ultra-large-scale data centers and small data centers, and the leaf-spine network architecture of data centers bringing about an increase in horizontal connection requirements, the demand for datacom optical modules has increased year by year. And the datacom optical module will evolve from the mainstream solution of 100G to the mainstream solution of 400G. In the future, the datacom optical module market is expected to achieve both volume and price.

In the datacom market, optical modules are mainly used in data centers, including three main scenarios

The interconnection between switches in the data center and between servers and switches is currently mainly based on 10G and 25G optical modules, which are gradually upgraded to 50G and 100G.

The interconnection between different computer rooms in the data center is currently dominated by 40G and 100G optical modules, and is gradually being upgraded to 400G.
The interconnection between multiple data centers is currently dominated by 40G and 100G optical modules, and is gradually being upgraded to 400G.

According to Cisco’s statistics, the internal communication of the data center accounts for more than 70% of the data center communication, occupying a large share of the datacom optical module market.

100g optical module

Data Center: The demand for cloud computing continues to grow, and 400G upgrades are imminent, driving the long-term growth of the datacom market.
The rapid development of cloud computing promotes the continuous advancement of data centers, especially the construction of ultra-large data centers. According to statistics from the Institute of Information and Communications Technology, the number of global data centers may decrease slightly in the future, but the number of total cabinets continues to grow rapidly, reflecting the continuous increase in the proportion of large and very large data centers. The network architecture of large and ultra-large data centers is evolving to a flat leaf-spine architecture, and at the same time, high-speed optical modules such as 100G and 400G are introduced to achieve large-bandwidth and low-latency transmission. On the other hand, the use of data center optical modules with servers and switches, the increase in the number of cabinets and the increase in average cabinet power will be able to support the deployment of more servers and switches, which is expected to continue to stimulate the demand for optical modules.

At present, the mainstream datacom high-speed optical module in the data center is 100G rate. With the continuous maturity of the industry chain technology, the next-generation 400G high-speed optical module will lead the datacom market into a new cycle of upgrading. For data center customers, the introduction of higher-speed optical modules can greatly save switch ports, thereby saving investment in cabinets and IDC equipment rooms. However, 400G optical module technology is more difficult, the value is expected to be further improved, and the industry competition pattern is also expected to be optimized, pushing the digital communication market into a new stage of development.

According to the forecast data quoted by LightCounting in the 800GMSA white paper, the market size of Datacom optical modules will increase from about 2.4 billion US dollars to about 6.5 billion US dollars in 2020-2024, with a compound annual growth rate of more than 25%, of which the demand for 400G optical modules will increase. The fastest, it will be the main growth point of the digital communication optical module market in the next five years.

400G optical module: QSFP-DD package may become mainstream
There are three types of packaging for 400G optical modules, namely QSFP-DD, OSFP and CFP8. Different from traditional telecom access network transmission equipment, data center interconnection needs to achieve larger and more intensive transmission of information, requiring switching equipment to have higher speed, lower power consumption, and more miniaturization. The solutions for 400G optical modules in data centers are the current mainstream QSFP-DD and OSFP packages. QSFP-DD has a smaller size and is more suitable for data center applications, which is the mainstream development direction; OSFP has a slightly larger package size and higher power consumption, and is more suitable for telecom applications.

100g optical module 1

OSFP and QSFP-DD also provide 8 transmission channels on the electrical interface and support PAM4 signals (50Gb/s) with a baud rate of 25GBaud, so 8x50Gb/s=400Gb/s signal transmission can be realized. The last CFP8 package has the highest power consumption and the largest size among the three models. Its power consumption can reach up to 18w, and its size is twice that of the other two packages. It is more suitable for long-distance telecom access networks and DWDM forwarding systems.

In the 400G era, silicon optical modules may meet new opportunities for development
At present, the 100G optical modules used in large data centers have been mass-produced. The traditional optical module technology is mature and stable, and the price is affordable.

Silicon optical modules have no advantages. In the upcoming 400G era, since the traditional VCSEL, EML, and DML signal modulation methods are close to the bandwidth limit, it is an opportunity for silicon photonics technology to overtake on a corner. Silicon photonics has significant technical and cost advantages in 400G modules. The 400G optical module needs to perform higher rate PAM4 modulation on multiple optical channels. Silicon photonics technology is highly integrated with modulators. At the same time, a single light source can be used to realize the modulation and transmission of 4-channel signals, which is more cost-effective. 400G optical modules (such as short-distance DR4) are expected to become the best market entry point for silicon photonics technology.

Related Resources:
400G Optical Transceiver Module Types
Typical Solutions for 400G Data Center
Typical Connection Solutions of 400G Optical Transceivers and Cables
The Next Station of Data Center Networks—200G vs 400G
400G Optical Module Application Scenarios
Four Types of Typical 400G Network Solution Plan Explained
400G Solutions Changes High-Bandwidth DCI Architecture
400G QSFP-DD FR4 vs 400G QSFP-DD FR8
A Beginner Guide: What is 400G Optical Module?
FAQs for 400G Transceivers and Cables