Optical Networking And Communications Market Size, Share & Trends Analysis Report Based on Component (Optical Fibers, Optical Transceivers, Optical Amplifiers, Optical Switches, Optical Splitters, Optical Circulators, Others), Based on Technology (SONET/SDH, WDM, CWDM, DWDM, Fiber Channel), Based on Application (TELECOM, Data Center, Enterprise), Based on Data Rate (Up To 40 GBPS, Greater Than 40 Gbps To 100 Gbps, Greater Than 100 Gbps), Based on Vertical (BFSI, Government, Healthcare, Cloud, Energy & Utilities, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2022-2030

Market Overview

The global optical networking and communications market size was valued at USD 15.65 billion in 2019 and is projected to reach USD 33.97 billion by 2030 at a CAGR of 7.3% from 2022 to 2030.

High-speed communication via infrared and optical signals is made possible by optical networks. In addition to long-distance national, international, and transoceanic networks, it also comprises local area networks (LAN) with limited coverage and wide area networks (WAN) that span metropolitan and regional areas. It is a type of optical communication that uses wave division multiplexing, optical amplifiers, lasers, or LEDs to transmit large amounts of data, typically across fibre-optic cables. Because it can achieve high bandwidth, it is an enabling technology for the Internet and telecommunication networks that transmit the vast majority of machine-to-machine data.

Market Dynamics

Drivers for the global optical networking and communications market

Demand for compact and energy-efficient trans-receivers is driving the market

Manufacturers of optical transceivers are placing a greater emphasis on research and development in order to support various applications in the metro network, data centre interconnect, long-haul applications, and other areas that call for optical transceivers to be compatible with the intricate network. Transceivers that are small and use little power are available from optical transceiver OEMs, including Fujitsu Optical Components (Japan) and Broadcom (US). Due to their great range of data connectivity at a faster rate, this trend is anticipated to promote the market growth of small and compact optical modules. These elements offer the optical communication and networking equipment sector optical transceivers with significant growth potential.

The need for high-capacity connectivity is driving the market

As there is a requirement for high-capacity connectivity, optical networking and communications are becoming more crucial. To support high-capacity transport systems, dense wavelength division multiplexing is frequently used at the core networks. Optical components such as optical amplifiers, tunable filters, transceivers, termination devices, and add-drop multiplexers are becoming increasingly dependable and reasonably priced. In order to get around the electronic bottleneck at network edges, optical technologies are being used more and more in the construction of access and metropolitan area networks. New design choices are provided by newly developed parts and systems for very fast optical networks.

Restraints for the global optical networking and communications market

Network complexity hampers the market

The use of connection ICs is expanding as a result of the diversity of protocols and platforms available, as well as the consistent need for smaller networks. In addition, both hardware and software are essential components of goods based on developing technologies, such as Internet of Things (IoT) devices that are used in optical communication networks. However, the network becomes more complex as a result of the use of ICs and IoT devices. Similar to this, a single small device must be fixed with drop modules, variable optical attenuators, and tap power monitors for network monitoring and control. The network has become more sophisticated as a result of the accelerating connectivity speed and rising number of high-bandwidth connections through fixed and wireless networks. The current network architecture is disjointed and prioritizes joint consumer-centric approaches above domain-specific growth. To reduce network complexity, which restrains the growth of the market for optical communication and networking equipment, businesses need to take a more inventive and network-oriented approach.

Opportunities for the global optical networking and communications market

The development of telecom infrastructure will bring in new opportunities

A significant positive impact will result from the expansion of the telecommunications infrastructure for emerging nations. Demand for smart devices and other linked applications is rising as a result of the development of IoT, AI, and Big Data. The capture, translation, and transfer of data into useful information—which is essential for the reinforcement of urban infrastructure—is made possible by the integrated technologies across communications industries. A high-speed fibre optics network that can swiftly move massive volumes of data from one end to the other serves as the backbone for this kind of infrastructure expansion. High-bandwidth oriented fibre optical cables integrated with optical transceivers are necessary for the rollout of the 5G and 6G networks in order to ensure secure and dependable data transfers. Thus, the growth of optical communication infrastructure across developing countries would be the key factor driving the optical communication and networking equipment market in the future.

Regional Analysis

In terms of revenue, the optical networking and communication market worldwide in 2019 was dominated by the APAC region. Optical network expansion is necessary for developing broadband services, and APAC nations are now experiencing a significant increase in internet penetration.

China, India, Malaysia, and the Philippines are showing a high rate of wireless communication adoption in APAC, as well as developments in the IoT space, which are driving up demand for fibre optic cables in the area. Another significant element promoting the market's expansion is the existence of major market players like Fujikura Ltd. and Furukawa Electric Co. Ltd., which provide optical fibres, electric fibre cables, and other components for optical networks. Additionally, a number of nations, including South Korea, China, and India, are anticipated to enhance the deployment of fibre-to-the-home (FTTH) solutions, supported by a continuously rising investment in communication network infrastructure.

A significant hub for cloud computing and data centres has arisen in North America. The market for optical communication and networking equipment is its greatest consumer. The expanded use of cutting-edge optical technologies, such as quantum optics, in the region's industries, businesses, and airlines can also be credited with the market expansion. The US has a large number of significant market participants and substantial defence spending, which are further driving forces for the market advancement in the region.

Segmental Analysis

This market can be segmented on the basis of components, technology, application, data rate, vertical, regions and competitors. In terms of market share for optical communication and networking equipment in 2021, the BFSI vertical held the highest share, with around 42% of the total. In the BFSI industry, optical communication and networking devices are being used more frequently to safeguard the private information of their clients, adhere to compliance requirements to ensure data security, make security auditing easier, and prevent reputational harm brought on by data breaches. Because of this, the market for optical communication and networking equipment is growing at a faster rate than the BFSI vertical.

The market for optical communication and networking equipment, broken down by component, was dominated by the optical transceiver sector in 2021, with a share of about 32%. The introduction of technical innovations like artificial intelligence (AI), machine learning, and 5G connectivity is primarily responsible for this expansion since they boost data traffic, which raises the need for large-scale data centres. During the forecast period, the segment for optical transceivers is expected to increase at the greatest CAGR. Data centres are becoming more and more in demand as the number of people using smartphones and other connected devices increase their internet usage, and cloud computing becomes a common method for IT deployment. The expansion of the optical transceiver market is anticipated to pick up speed in the near future as a result of these factors.

Recent Developments

• In June 2020, Cisco Systems Inc. and Telenor Group signed a joint purpose agreement outlining areas where they will strengthen their joint focus on security, 5G, open virtualised radio access network (vRAN), business-to-business (B2B) expansion, distributed cloud, and furthering Telenor Group's digital transformation strategy to support its flexible working approach.
• Palantir Technologies Japan, Palantir Technologies Inc., and Fujitsu Ltd. announced in June 2020 that they had joined forces in a strategic alliance to advance Japan's Digital Transformation (DX) goals and offer top-tier ICT to the Japanese market. In accordance with the terms of the agreement, Fujitsu will market its DX Services in Japan as a supplement to Palantir's market-leading software platforms as the country's single Flagship Technology Partner.
• XR optics-based networking solutions will be available thanks to a partnership between Infinera Corporation and Lumentum Holdings Inc., a designer and producer of optical and photonic equipment that was announced in February 2020.