The report indicates that high-speed datacom modules, especially 800GbE and the emerging 1.6TbE, will remain the primary growth driver through 2026. At the same time, pluggable coherent telecom modules and embedded optics of 1.2T or higher will fuel renewed bandwidth expansion over the next several years.
Cignal AI forecasts total revenues for optical datacom components to grow at a compound annual growth rate (CAGR) exceeding 20% between 2024 and 2029, reaching nearly $29 billion by the end of the forecast period.
“For the first time, more than 10 million optical datacom modules of 400G or higher were shipped last quarter, exceeding $5 billion in revenue,” said Scott Wilkinson, principal analyst at Cignal AI. “The next growth engine will be 1.6TbE and coherent modules, which will allow applications to scale to high volumes, as companies like Ciena, Cisco/Acacia and Nokia ship 800ZR+ modules for applications on Meta and other major players.”
Additional findings from the report on optical components:
Quarterly revenues for datacom optical components exceeded $5 billion and are projected to reach $30 billion by 2029, at a five-year CAGR of 21%, driven by AI-powered hyperscalers and higher-speed optics.
Total shipments of high-speed datacom modules (400GbE and above) will reach 42 million units in 2025, led by 800GbE growth; 1.6TbE modules will grow rapidly in 2026.
The forecast for 800GbE modules has been increased to over 20 million units, with no signs of slowing demand. 1.6TbE shipments will exceed 5 million units in 2026.
The addressable market for 400GbE datacom modules will reach nearly $30 billion in 2029, even with average prices below $0.40 per gigabit.
Coherent bandwidth in telecoms will grow by more than 40% in 2025 and even faster in 2026, driven by 400ZRx, 800ZRx, and 1.2T+ embedded optics in both metropolitan and long-haul networks. Pluggable coherent modules will carry more than 60% of telecom bandwidth in 2026.
Innolight maintains its leadership in 800GbE module shipments, although the gap is narrowing with respect to Eoptolink, Coherent, and Nvidia. Marvell and Acacia lead in 400ZRx, with possible changes as Ciena and Nokia begin shipments of 800ZRx.
