LightCounting：Global optical module market growth is expected to slow to 4% in 2023

Recently, LightCounting, a market research organization for the optical communication industry, released the latest market forecast.

LightCounting pointed out that the optical communications industry entered 2020 with very strong momentum. Demand for DWDM, Ethernet, and wireless fronthaul connections surged in late 2019, and in 2020 and 2021, as the COVID-19 pandemic accelerates a major shift in learning and working from home, the need for faster, more ubiquitous, and more reliable networks intensifies . While supply chain shortages continue, the industry has been able to overcome them to a large extent, with the optical module market experiencing strong growth in 2020 and 2021, as shown in the chart below.

LightCounting believes that after the optical module market has grown by 17% and 10% in 2020 and 2021, respectively, it is expected to achieve strong revenue growth again in 2022, with an expected 14%. However, it is expected to slow to 4% in 2023 before recovering in 2024-2025.

Currently, demand for optical modules in all market segments is strong, but in the first nine months of 2022, continued bottlenecks in the global supply chain have negatively affected the sale of 400G DR4 and 100G DR1+ optical modules to Amazon. Meta has significantly increased the deployment of optical modules this year, but its latest forecast for 2023 has significantly reduced. LightCounting noted that Amazon and other cloud computing companies could slow investment in 2023 if the current economic slowdown continues to negatively impact their advertising, streaming and retail businesses.

LightCounting's latest forecast is for a compound annual growth rate of 11% for the global optical module market from 2022 to 2027, which is not much different from the 13% compound annual growth rate in the forecast released in October 2021.

Strong sales of DWDM and Ethernet optical modules accounted for the majority of market growth in 2021, and these segments are expected to lead the growth in 2022-2027. Sales of optical interconnect products, primarily active optical cables (AOCs), will also grow at double-digit rates over the next five years. Sales of PON optical modules for FTTx networks will remain stable, as while the 10G PON deployment cycle in the Chinese market will come to an end, North America and Europe have ramped up 10G PON deployments driven by government funding programs, 25G and 50G PON The latter part of the forecast period will provide new growth. As China's 5G network deployment is nearing completion, the wireless fronthaul market is relatively weak, and this segment will resume growth in 2026-2027 as 6G deployments begin.