Wavelength Division Multiplexer Market

Market Overview

The global wavelength division multiplexer market had a revenue share of USD 3,799 million, expected to project to USD 6,383 million with a CAGR of 6.7% during the forecast period. Wavelength-Division Multiplexing is a frequently utilized technology to build high-capacity optical communication systems. In fiber-optic communications, a wavelength division multiplexer, also known as WDM, is a method for multiplexing several optical carrier signals across a single optical fiber channel. This is accomplished by varying the wavelengths of the laser beams. In addition, it permits communication to occur along the fiber line in either direction. WDM is the fundamental building component for high-capacity optical communications networks, and network providers employ it to meet the ever-increasing demand for their services and achieve maximum capacity.

In wavelength division multiplexing (WDM), the optical signals from several sources or transponders are merged by a multiplexer, simply an optical combiner. They are blended in such a way that their wavelengths differ. A single strand of optical fibre carries the combined signal. A demultiplexer separates the incoming beam into its component beams at the receive side, which is then sent to their respective receivers. Over the forecast period, the global wavelength division multiplexer market is estimated to grow significantly.

Increasing demand for a high-capacity network and effective communication, rapid development in the number of Internet users and network traffic worldwide, and a spike in telecommunication applications are factors that drive the market's expansion. In addition, introducing new products is anticipated to boost the WDM industry. However, dark fiber networks' expense may hinder the expansion of the wavelength division multiplexer market. On the other hand, the expansion of modern network infrastructure and the expansion of cloud and IP traffic is predicted to generate lucrative potential possibilities for the wavelength division multiplexer market.

Market Dynamics

Market Driving Factors

The Rising Demand for High-Capacity Network and Effective Communication

There is a growing demand for cost-effective ultra-high-capacity networks to sustain the consistent traffic growth rate and the high dependability desired by individuals in their everyday lives and corporate endeavors. In addition, for the sake of the global environment, it has become essential to achieve low power consumption to enable continued traffic increase. Consequently, optical fiber is now the standard for high-capacity networks and efficient communication. This is one of the essential elements pushing the development of wavelength division multiplexers to assure the efficiency of optical fiber communication networks.

Growth in Internet User and Network Traffic Around Worldwide to Aid Growth

As more devices are connected and more applications are created, the volume of data going through the internet continues to expand. This rise was illustrated by the Cisco Visual Networking Index, which revealed that Internet Protocol (IP) traffic throughout the globe was expanding rapidly and predicted that mobile data traffic would increase exponentially and reach approximately 30.6 exabytes per month by 2020.

In addition, an increase in smartphone users is expected to boost internet usage. In addition, the bandwidth of optical fiber networks has increased proportionally to the exponential growth of internet traffic, the number of various services and applications, and the number of optical fiber networks. Users of fiber optics benefit from higher bandwidth; consequently, demand for wavelength division multiplexers has surged. This aspect is principally responsible for expanding the global wavelength division multiplexers market.

Market Restraining Factors

Cost of Dark Fibre Network to Hinder Market Growth

Dark fiber networks are a type of optical fiber network typically privately held (used for internet networks or private networking), even though a different provider owns the fiber. The private owner obtains the dark fiber by entering a lease agreement with a network service provider or telecommunications company. In addition, rather than leasing, certain companies opt to own their dark fiber networks. However, because of the high leasing or purchase expenses, the adoption of dark fiber can be more expensive. As a result, the expansion of the global wavelength division multiplexer market is hampered because of this aspect.

Key Market Opportunities

Growing Advanced Network Infrastructure and Increase in Cloud & IP Traffic

Due to their improved benefits, the implementation of Voice over Internet Protocol (VoIP), Long-Term Evolution (LTE), and 5G network technologies is on the rise across the globe. These technologies necessitate an increase in transmission capacity, rate, and network performance. For example, copper-based infrastructures of the past could not provide 5G bandwidth. In addition, the deployment of 5G radios and base transceiver stations (BTS) has caused a massive data explosion, which is the crucial motivation for massive capital investments in fiber infrastructure deployments.

In contrast, developing Internet applications are becoming increasingly network-based and high-performance, depending on cloud computing and optical network services. In addition, businesses worldwide are operating an increasing number of virtual machines (VMs). Consequently, a larger quantity of data must be processed, analyzed, stored, shared, and backed up. This has increased the demand for quicker network connections. As virtualization and cloud operations become fundamental enterprise technologies, there is a significant shift in network requirements. Therefore, these considerations drive enterprise use of optical fiber communication and wavelength division multiplexers.

Regional Analysis

The regional segmentation of the global wavelength division multiplexer market includes North America, Europe, Asia-Pacific, and LAMEA.

Why Are Asia-Pacific And North America Projected to be the Most Lucrative Market During the Assessment Period?

Asia-Pacific will command the regional market with the largest share and a CAGR of 6% during the forecast period. The wavelength division multiplexer market is expanding rapidly in countries such as China, Japan, India, and South Korea. This results from the widespread usage of cell phones and technical progress. During the forecast period, the Asia-Pacific wavelength division multiplexer market is anticipated to expand substantially. This is due to the rapid emergence of intelligent communication devices such as desktop computers and cellphones. 

China is one of Asia-Pacific's most significant contributors to the market for wavelength division multiplexers. This is attributable to the rising use of fiber optic cables to transport signals with minimal loss. According to the China Internet Network Information Center's (CNNIC) 2019 report, 80% of China's broadband connections were fiber-based in 2016, but this percentage increased to 91% in 2019.

North America will hold the second largest market share of USD 1,712 million with a CAGR of 7.3% during the forecast period. The United States and Canada, expenditures on wavelength division multiplexers continue to rise rapidly. North America maintains a sizeable market share for wavelength division multiplexers since the region promotes massive investments in 5G networking technology and consumer electronics. The wavelength division multiplexer industry in North America is primarily driven by growing cloud computing and a thriving IoT market. In addition, the region's telecommunications business has an enormous demand for cloud-based services. This has caused cloud service providers to invest substantially in their data center and network infrastructures, strengthening the wavelength division multiplexer industry. In addition, industry participants provide innovative products to meet cloud computing needs.

Europe will grow at the highest CAGR during the forecast period. The development of wavelength division multiplexer (WDM) technology by network operators to increase fiber bandwidth while simplifying operations and reducing costs drives the expansion of the European market. In April 2019, Nokia cooperated with Netia, a Polish service provider, to undertake a field trial of the highly coherent Photonic Service Engine 3 (PSE-3) technology over a live production DWDM network. Netia's wavelength division multiplexing (WDM) is built on the Nokia 1830 Photonic Service Switch (PSS) with flex-grid technology, which permits an upgrade to high baud-rate wavelengths.

Segmental Analysis

The global wavelength division multiplexer market is classified into various segments based on type, industry vertical, and region.

By Type

Based on type, the wavelength division multiplexer market is fragmented into CWDM and DWDM.

DWDM, or Dense Wavelength Division Multiplexing, is expected to hold the largest market share in revenue with a CAGR of 6.9% during the forecast period. Dense Wavelength Division Multiplexing communications can be enhanced for data transmission over significantly greater distances. As a result, it is a more appropriate technology for high-speed protocols, as it can handle protocols with speeds exceeding 100Gbps per channel. It boosts bandwidth on existing fiber networks by transmitting and mixing numerous signals simultaneously on the same cable at different wavelengths.

Demand for dense wavelength division multiplexing is driven by the rising volumes of data to be carried and the soaring demand for fiber optic capacity. This technique enables the transmission of additional data without altering or adding fibers. In addition, the capacity of DWDM to improve bandwidth by permitting the transmission of multiple data streams over a single optical fiber network accelerates the expansion of the DWDM market.

CWDM, or Coarse Wavelength Division Multiplexing, allows up to 18 wavelength channels to be simultaneously delivered across a fiber. This technology offers an economical and practical alternative for shorter trips up to 70 kilometers. This segment is growing because of the increasing use of CWDM in the metro, cable TV, access, and corporate applications.

By Industry Vertical

Based on the industry vertical, the wavelength division multiplexer market is fragmented into IT & telecommunication, military & defense, oil & gas, and medical & healthcare.

The IT & telecommunications segment is expected to hold the largest market share among the other industrial vertical with a CAGR of 7.3% during the forecast period. In the core networks of telecommunications and cable networks, wavelength division multiplexing is typically utilized by IT and telecommunications sector participants. In addition, it is employed in cloud data centers that provide IaaS services for IT organizations.

Increased demand for high-speed telecommunications and data communications networks in the IT & telecom sector as a result of technological advancements, like new multimedia services (high-definition (HD) and three-dimensional visual information (3D), fuels market expansion. In addition, the growing bandwidth demand has increased telecom service providers' difficulty in delivering high-quality services to the end-user device. With wavelength division multiplexing (WDM), more data may be transported on a single fiber strand; thus, there is a boom in the telecom industry's use of WDM to carry distinct packets of data and boost the data transmission capacity.

Oil & gas is expected to hold the second-largest market share. The demand for oil and gas has accelerated the growth of this industry. Installation of fiber optics is a crucial component of this expansion, allowing the companies to capitalize on fiber's benefits while boosting operational precision and performance. The oil and gas industry's use of optical networks and wavelength division multiplexers is fueled by the need for exact connectivity and cabling to assure efficiency, safety, and endurance in harsh environments. In this industry, fiber optics is the link for control, data, and sensing various qualities. Optical communication and networking for the oil and gas industry offer high bandwidth in a compact cable and reduce installation time, weight, and dimension. Consequently, the need for wavelength division multiplexers is on the rise.

Recent Developments

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• In 2022, Ciena Corporation, JP Morgan Chase, and Toshiba demonstrated the viability of a first-of-its-kind Quantum Key Distribution (QKD) network for metropolitan areas. 
• In 2022, Huawei Technologies revealed the Net-Generation Data Centre Facility and unveiled PowerPOD 3.0, a brand new power supply system in Dongguan, China.