While demand for optical transceivers from Chinese systems houses continues to disappoint (see, for example, "NeoPhotonics blames slow China demand for upcoming layoffs"), cloud data center operators may pick up the slack for some vendors, reports LightCounting. The market research firm says it now expects shipments of 100 Gigabit Ethernet (100GbE) optical modules to reach 3 million units in 2017, an increase of 20% over its previous forecast.
The fact that optical transceiver vendors have added production capacity helps explain the jump; 100GbE optical module sales in 2016 suffered when demand exceeded supply in many cases. However, appetite among data center operators for such modules will remain strong. LightCounting says that leading 100GbE customers plan to double or triple their purchases in 2018.
LightCounting notes its forecast methodology includes correlation between the growth rates of the aggregated bandwidth of optical connections within data centers and the data center traffic. Amazon, Facebook, and Google report that traffic in their mega data centers increased more than 100% in 2016 and will likely continue to do so in 2017, says the market research firm. LightCounting adds that its research into shipments of optical transceivers to these operators is consistent with close to a 100% annual growth in traffic.
As to potential demand for optical modules that support transmission rates greater than 100 Gbps, LightCounting says its crystal ball remains cloudy. For example, the analysts note that Google has come out in favor of 200GbE, particularly in a 2x200GbE module format. However, Microsoft and Facebook have said they prefer going straight to 400GbE; indications are that Amazon feels the same way.
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