Market Trends of Optical Interconnect Industry
This section covers the major market trends shaping the Optical Interconnect Market according to our research experts:
Data Communication is Expected to Spur the Demand for Optical Interconnects
- One of the major applications of optical interconnectivity is within data communication networks which include datacenter networks, wireless access networks, and wired access networks. Current data center networks, which are based on electronic packet switches, experiences an exponential increase in network traffic due to cloud computing development. Optical interconnects emerged as a promising alternative that offers high throughput, low latency, and reduced power consumption.
- According to IEEE Communications, all-optical networks could provide up to 75% energy savings in the data centers. Especially in large data centers used in enterprises, the use of power efficient, high bandwidth, and low latency interconnects is of paramount importance, and there is significant interest in the deployment of optical interconnects in these data centers.
- Currently, optical technology is utilized in data centers is only for point-to-point links, which is in the same way as point-to-point optical links that were used in older telecommunication networks (opaque networks). However, optically switched interconnects are still in the research phase.
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North America To Witness High Market Growth
- The rapid penetration of the internet is expected to raise the growth of the market in this region. Moreover, according to Cisco Systems, the cloud traffic in 2021 is estimated to be around 6844 exabytes per year in North America, which is highest in comparison to other regions. According to the November 2020 edition of the Ericsson Mobility Report, North America was expected to end 2020 with about 4% of its mobile subscriptions being 5G. Hence, such trends create scope for the market, as a powerful interconnect is required to enable cell towers and other applications to handle 5G transmissions.
- Also, North America has various players that provide optical interconnect products and solutions, along with players who are also keen to innovate new solutions for the improvement in interconnect bandwidth density at around 10x lower power. For instance, in March 2020, Ayar Labs announced that it had received a strategic investment from Lockheed Martin Ventures, where the funds will be used to accelerate the commercialization of Ayar Labs’ patented monolithic in-package optical I/O (MIPO) solution for applications that require high bandwidth, low latency, and power-efficient short-reach interconnects.
- Moreover, data movement within the data center is becoming a critical feature, and the rise in the ample of new businesses leveraging data center services in the United States, and Canada will leverage more machine-to-machine (M2M) traffic. To overcome this problem, IBM focuses on providing optical switches in the data center as a key to resolve the problem. IBM is undertaking to build reconfigurable optical switches using silicon-photonic technology. If implemented, this optical solution becomes a new trend in the optical interconnect market.
- In June 2020, Equinix Inc., the global interconnection and data center company, announced its agreement to purchase a portfolio of 13 data centers across Canada from BCE Inc for USD 750 million in an all-cash transaction. The 13 data center sites representing 25 Bell data center facilities are likely to generate approximately USD 105 million annualized revenue.
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