Optical Communication Chip Report: 2023 Market Decline, But Grow in the Future

Optical communication electrical chip market demand is mainly divided into telecommunications market and data communication market, other areas such as lidar, sensing, power and other fields have a certain amount of use, and rapid development. ICC(Xunshi Information Consulting Co., Ltd.) believes that there is a relatively obvious decline in the telecommunications market in 2023, mainly due to the decline in optical access network demand, but the situation is expected to usher in a rebound in 2024. In addition, the data communication market demand will remain strong in 5 years, mainly benefiting from the strong demand for high-speed optical modules, especially 400G and above optical modules and AI/ML. However, the demand for low-speed electrical chips may face a decline, mainly due to the overall rate upgrade of the application market.

From the source of demand for optical communication electrical chips, the number of demands of 10G and below is still the largest, especially for electrical chips of 2.5G and below, mainly because of the huge market size of access network PON modules. However, from the perspective of development trend, the demand of 2.5G and below will show a downward trend, the main reason is that with the completion of FTTH construction and deployment, FTTH users tend to be saturated, resulting in a gradual decline in demand. 10G demand will continue to rise in the next two years, mainly driven by the deployment of gigabit networks in China and around the world.

In the field of 25G and above, the demand for 100G optical modules has gradually slowed down in recent years, slowing down the development of 25G TIA and LDD&LA markets. In terms of 50G, it is mainly driven by 200G/400G optical modules. It is expected that the 50G related electrical chip market will usher in a breakthrough period in 2026, and the key factor is China's landing deployment of the 50G PON system.

In early 2023, the development of 800G industrial chain was driven by the development of AI, and the performance of other markets did not meet expectations. According to the analysis of the ICC, the demand for 10G electrical chips in 2023 fell by about 35%, and the decline of 2.5G and below electrical chips also reached 25%.