AI-driven datacenter and transport builds drove optical component revenue to almost $25B in 2025

The optical component industry will continue to benefit from the ongoing AI-driven data center buildout, as service providers respond with network transport builds. 

Cignal AI noted in its Optical Components Report that AI-driven data center and transport builds will drive the optical components market to a record high in 2025, with datacom revenue forecast to exceed $18 billion and coherent module revenue to reach nearly $6 billion.

The two primary revenue growth drivers for 2026 within the high-speed datacom module segment will be 800GbE and emerging 1.6TbE designs. Likewise, telecom coherent pluggables and 1.2T+ embedded optics drive a renewed multi-year bandwidth expansion.

The research firm expects total datacom optical component revenue to grow at a CAGR of 20%+ from 2024 through 2029, reaching nearly $29 billion by the end of the forecast period.

Scott Wilkinson, lead analyst at Cignal AI, noted a surge in 400G optical module sales. “More than 10M 400G+ Datacom optical modules shipped last quarter for the first time, breaking $5B in revenue,” he said.

800GbE, 1.6T demand rising

The market for high-speed datacom modules at 400GbE and above is poised for growth.

Cignal AI estimates the addressable market for 400G+ datacom modules will reach nearly $30 billion by 2029, even as blended prices fall under $0.40 per gigabit by the end of the forecast period.

Led by 800GbE growth, the research firm said that in 2025, total shipments of high-speed datacom modules will reach 42 million units. At the same time, 1.6 Tbps modules will “grow rapidly” in 2026.

During the third quarter, Cignal AI’s 800GbE module forecast rose to 20 million units, as vendors don’t see any softness in demand, while the 1.6TbE forecast is expected to exceed 5 million units in 2026.

“The next growth engine is 1.6TbE and coherent modules for scale across applications, as Ciena, Cisco/Acacia, and Nokia ship 800ZR+ modules for applications at Meta and others,” Wilkinson said.

Pluggable coherent modules are expected to account for more than 60% of telecom bandwidth by 2026.

From a vendor perspective, Innolight continues to lead the market in 800GbE module shipments.

However, Cignal AI said “the gap is narrowing” with Eoptolink, Coherent, and Nvidia. Marvell and Acacia remain the dominant vendors in 400ZRx, with movement likely as Ciena and Nokia begin shipments of 800ZRx.

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