While emphasizing that “demand for Ethernet optical transceivers remains strong across all market segments,” LightCounting has reduced its forecast of 2022 Ethernet optics sales growth from 22% to 9%. The shrinkage results from smaller shipments than anticipated to a pair of hyperscalers rather than macroeconomic forces, the market research firm states.
The reduced expectations for this year derive from smaller than anticipated sales of 400G DR4 modules to Amazon and 2x400G transceivers to Google in what LightCounting analysts assured its subscribers represents as “just a fluctuation.” The two hyperscalers’ purchases are expected to get back on course next year. The reduced spend at Amazon is the result of server delivery delays, while Google is still taking the bugs out of the equipment that will need its 2x400G transceivers, asserts the market research firm.
Nevertheless, the smaller total market size has accelerated price declines, which LightCounting says will remove 1% from the previously expected market CAGR for 2023-2027 and reduce the project 2027 market size by $0.7 billion. As a result, LightCounting now expects a 13% CAGR in 2022-2027, leading the market at $9.3 billion by 2027. This amount still doubles the record set in 2021.
What about recession?
Along the way, sharply higher sales of 800G and the first deployments of 1.6T transceivers will lead to a growth spike in 2025, LightCounting believes (see chart above). An economic recession might shift that spike to 2026, notes the market research firm. That said, the company reports that transceiver suppliers have not yet indicated that they have seen weaker demand related to the current economic slowdown (although one test equipment company has).
LightCounting notes that cloud companies accounted for 68% of the Ethernet transceiver market in 2021 and are projected to account for 82% by 2027. If such companies continue to invest in their cloud data center infrastructure as planned, the Ethernet transceiver market should whether any recession with minimal impact, LightCounting believes.
LightCounting’s High Speed Ethernet Optics report forecasts sales in more than 50 product categories, including 1GbE, 10GbE, 25GbE, 40GbE, 50GbE, 100GbE, 200GbE, 2x200GbE, 400GbE, 800G, and 1.6T transceivers, sorted by reach and form factors. The report also provides a summary of the technical challenges faced by high-speed transceiver suppliers, including a review of the latest products and technologies introduced by leading suppliers.
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