Cignal AI says hyperscaler investment is “radically” reshaping the optical components market
As hyperscalers and telcos ramp up their capital spending on optical networking, this is driving an uptick in the top datacom optical component vendors' revenues, a trend evident in the first quarter.
In its 1Q26 Optical Components Report, Cignal AI noted optical component revenue reached a record $7.7 billion in the quarter, more than doubling year-over-year. In comparison, telecom optical component revenue set a record of $2.0 billion.
One of the key developments the research firm pointed out about the first quarter was an inflection in next-generation optics: 1.6TbE datacenter modules ramped up, and 800ZR+ coherent pluggables began shipping into their first large-scale data center deployments.
Co-packaged optics (CPO) port deployment and the optical circuit switching (OCS) market were also notable developments.
Building on its ELSFP-based CPO forecast initiated earlier this year, Cignal AI’s 1Q26 edition of the Optical Component Report combined quantitative component tracking for co-packaged optics (CPO) port deployment and the optical circuit switching (OCS) market into a single quarterly publication.
“AI is setting shipment unit records for optics across the board, and the pace is only accelerating. 800GbE optics shipments show no sign of slowing, 1.6TbE is ramping faster than we expected a quarter ago, and component shortages are slowing the usual price declines,” said Scott Wilkinson, Lead Analyst for Optical Components at Cignal AI. “Outside the datacenter, the race to fill Meta’s 800ZR+ scale-across orders has begun, with Acacia taking an early lead.”
400G, 800GbE, ZR+ and 1.6T accelerate
During the quarter, Cignal AI found gains across various optical speed domains: 400G, 800GbE, 1.6TbE, and 800ZR+.
Led by Innolight, high-speed (400G+) datacom module shipments rose a record 145% year-over-year. The research firm said that Innolight again held onto its top spot on its Optical Components leaderboard, driven by strong datacom revenue and high-speed module shipments. Nearly 20 million modules shipped in the quarter as AI build-outs accelerated.
In the high-speed datacom module segment, 800GbE now makes up the lion’s share of high-speed datacom module shipments. Cignal AI forecasts that shipments will more than double in 2026. Wilkison said that “volumes more than tripled year-over-year, and 800GbE will remain the workhorse of AI datacenters even as 1.6TbE begins shipping in volume.”
The 1.6TbE module market also saw gains, with shipments growing 50% sequentially, and the segment is on track to surpass 10 million units in 2026. Nearly all 1.6TbE optics currently ship in DR (silicon photonics) configurations.
With the first large-scale deployments at Meta, shipments of 800ZR+ pluggables rose. The research firm expects 800ZR+ to easily meet existing 2026 forecasts as additional suppliers ramp up to volume.
CPO, OCS rising
CPO and OCS are now entering the starting line.
As Nvidia, Broadcom, and TSMC advance their respective 200G/lane platforms, Cignal AI said that “CPO deployments are imminent.” After a modest start this year, the research firm forecasts that CPO will grow to tens of millions of ports annually by 2030 as it expands from scale-out to scale-up networks.
Cignal AI’s Q1 report integrates its OCS forecast.
Driven by AI cluster reconfiguration in TPU-based networks, the total addressable OCS market is forecast to exceed $1 billion this year and grow several-fold by 2030.
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Sean Buckley
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