Coherent optical transceiver shipments are rapidly growing thanks to the advent of large-scale AI clusters from hyperscalers.
Dell’Oro predicts a double-digit compounded annual growth rate (CAGR) for the next five years, surpassing over five million cumulative shipments.
"Today's largest AI clusters built by hyperscalers are already approaching 100 thousand accelerators, with projections reaching up to one million in the near future," said Sameh Boujelbene, VP for Ethernet Switch market research at Dell'Oro Group.
The research firm said that vendors' advancements in smaller, energy-efficient coherent transceivers are rapidly broadening their platform compatibility and application diversity.
"The move to pluggable coherent transceivers is occurring at a rapid pace," said Jimmy Yu, VP for Optical Transport market research at Dell'Oro Group. "This movement accelerated with the wide availability of ZR/ZR+ optics and, more importantly, the adoption of an IPoDWDM architecture.”
Boujelbene agreed and added that powering issues are driving the need for data center interconnection to link data centers.
"Due to the limited power capacity in each data center—and the high-power consumption of these accelerators—AI clusters are increasingly distributed across multiple data centers,” said Boujelbene. “This shift heightens the importance of Data Center Interconnect technologies that connect these data centers efficiently.”
ZR optics factor
A significant factor in optical transceiver growth is the advent of ZR optics.
With the introduction of higher transmit-powered transceivers, Dell’Oro said that ZR+ optics is on the rise
The research firm forecast that ZR+ optic shipments will grow at a five-year CAGR of 70%.
Also, the rising demand for higher data center speeds to support AI/ML compute clusters has driven Dell’Oro to raise its forecast for 1600ZR and lower that of 800ZR.
“We have significantly raised our optical transceiver shipment forecast to reflect faster than expected adoption of ZR pluggable optics and increased demand on hyperscalers backbone bandwidth propelled by large AI clusters,” Yu said.
Router switches influence
Another key trend to watch is coherent optics being part of router and switch platforms.
Coherent optics deployed on router and switch platforms will account for more than 50 percent of the annual increase in transceiver shipments throughout the forecast period.
By 2028, Dell’Oro expects them to constitute more than 45 percent of the total transceiver volume.
“We currently project that nearly half of the coherent transceivers will ship on routers and ethernet switches over the next five years,” Yu said.
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.