Coherent Transceiver Shipments to Reach $13 Billion In 2027

According to market research firm Dell 'Oro Group, in the next five years, global coherent optical transceiver shipments will grow at a compound annual growth rate of 17%. In addition, the coherent optics market is undergoing a structural shift with the advent of small size pluggable optics, which will increase the adoption of coherence technology in routers and Ethernet switches.

The group's latest Coherent Optics Advanced Research report finds that the coherent optics market is expected to reach nearly $13 billion by 2027, driven by modular/embedded and pluggable devices.

Specifically, pluggable transceivers are expected to grow at the highest rate and contribute the majority of market share growth over the next five years. Jimmy Yu, vice president of optical transport market Research at Dell 'Oro Group, said: "The demand for coherent technology is expanding. This is partly driven by the continued demand for better, lower power, higher capacity transceivers to meet the demands of future global networks." He says a number of factors will contribute to the shift: "The driving factor is the idea of smaller plugs. "Once you can make it in QSFP form factor and fill the panel of an Ethernet switch or router, it becomes a much more viable solution." Coherent transceivers used on DWDM systems will continue to contribute the largest market revenue share. However, the use of coherent optical transceivers on router and switch platforms will reach the material level in a short time.

Dell 'Oro said the coherent optics market is undergoing a "structural shift," with the emergence of small, pluggable optics that will increase the use of coherence technology in routers and Ethernet switches.The shift to coherently pluggable fiber was initially driven by hyperscale data center operators, who pushed for shorter spans and point-to-point high-capacity links. One of the key catalysts was the emergence of ZR optics - ZR+ represents a series of coherent pluggable solutions that maintain line capacity up to 400gbps and far exceed the 120 km specification of the 400ZR.

As the coherent optics market makes it easier to commercialize small size pluggable devices, more of the coherent market will focus on routers and switches. Dell 'Oro revealed that coherent optical transceivers deployed on router and switch platforms will account for more than 50% of annual transceiver shipment growth throughout the forecast period. This is due to ZR optics between 400ZR-1600ZR beginning to accelerate commercial penetration in the market.

Sameh Boujelbene, vice president of Ethernet Switch market research at Dell 'Oro Group, said: "Historically, most coherent optics have been applied primarily to DWDM systems. However, as vendors make strides in developing smaller, more energy efficient coherent transceivers, their use is expanding rapidly. Expansion includes not only the range of platforms they can support, but also the diversity of applications they can cater to."

The research firm says the coherent optics market is undergoing a "structural shift," with commercial penetration of small-size pluggable optics that will increase the use of coherent technology in routers and Ethernet switches.