Data center interconnect applications continue to consume record quantities of pluggable coherent modules. The 400ZR and ZR+ modules accounted for the majority of WDM bandwidth deployed in 2024, with the majority of modules supplied by Marvell, Acacia, and Ciena.

“Operator deployment of hyperscale optics for connectivity both within and between data centers will continue to grow dramatically in 2025, albeit at reduced growth rates compared to 2024,” explained Scott Wilkinson, chief optical component analyst at Cignal AI. “Operators will also begin a large-scale transition to 1.6T optics and 800ZR coherent modules in the second half of this year.”

report-2024-Q4-optical-systems-2-w

report-2024-Q4-optical-systems-3wAdditional findings from the Q4 2024 Optical Components Report:
The data communications optical components market is projected to grow by more than 60% to reach revenues exceeding $16 billion by 2025, primarily driven by continued growth in 400G and 800G shipments.
Innolight, Coherent, and Eoptolink are the largest suppliers of data communications modules, while Coherent, Broadcom, and Lumentum are the leading sources of critical optical components.

The transition to 1.6T optics for data communications will begin in 2025, but will not affect the growth rate of 400/800G technology until 2026. Furthermore, co-packaged optical components are not expected to have a significant impact on pluggable component shipments over the next three years.

Telecom component revenues are expected to recover in 2025, driven by continued growth in 400ZR coherent optics, along with accelerating sales of the latest generations of WSS modules and amplifiers.
Lumentum was the leader in telecom component revenues in 2024, followed by 400ZR suppliers Marvell and Acacia.

No adjustments have been made to the forecasts due to tariffs and trade uncertainty, but industry participants are notably pessimistic (see Active Insight's free report).

The Cignal AI Optical Components Report is published quarterly and provides revenue-based market share data for companies across four optical component markets: data communications, telecommunications, industrial, and consumer. The report also tracks shipments and total market size for data communications and telecommunications components, including 400GbE/800GbE/1.6TbE data communications transceivers used in data center applications, as well as 400ZR/800ZR pluggable and embedded coherent transceivers for telecommunications applications.

Five-year forecasts are provided for all revenue segments, along with detailed unit shipments. The data, including forecasts, is continuously updated as new information becomes available and market developments impact the industry outlook.

Companies included in the report are Acacia, Accelink, Adtran, ADVA, Applied Optoelectronics, Broadex, Ciena, Cisco, Coherent, Emcore, Eoptolink, Fiberhome, Finisar, Fujitsu, Furukawa Electric, HG Genuine, Huawei, Hisense Broadband, Infinera, Innolight, Inphi, Intel, IPG Photonics, Jabil, Lumentum, Marvell, Mitsubishi, Molex, NEC, Neophotonics, Nokia, OE Solutions, PacketLight, SONT Technology, Source Photonics, Sumitomo, Sumitomo Osaka Cement and ZTE.

About Cignal AI:
Cignal AI provides active and in-depth market research for the networking components and equipment market and its end users. Our work combines expertise from diverse disciplines to create a unique and well-informed perspective on the evolution of network communications.