Co-packaged Optics Market Size
| Study Period | 2019 - 2029 |
| Base Year For Estimation | 2023 |
| CAGR | 75.20 % |
| Fastest Growing Market | Asia Pacific |
| Largest Market | North America |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Need a report that reflects how COVID-19 has impacted this market and its growth?
Co-packaged Optics Market Analysis
The co-packaged optics market is anticipated to register a CAGR of 75.2% during the forecast period. The COVID-19 pandemic led to the disruption of the supply chain for the construction of data centers. The lockdown also led to delays in the completion of projects and a decline in demand from severely hit industries such as hospitality and entertainment, which also impacted construction activities. According to a recent report by Uptime Institute on COVID-19 risks, there are supply chain disruptions and potential for long-term shortages and critical spares and consumables. The data center operators with standardized supply chains, uniform build processes, using prefabricated components, and supplier contracts already in place will be best positioned to withstand temporary disruptions.
- The need for data centers increased in recent years due to the high adoption of cloud services, further driving the studied market. According to the survey results published in the Cloud Infrastructure Report 2021, 57% of the respondents reported that more than half of their infrastructure is in the cloud, while 64% expect they will be fully in the public cloud in the next five years.
- In a recent report, the Ministry of Electronics and Information Technology (MeITy) projected that India's economy would grow to USD 5 trillion by 2025, with its digital sector accounting for between USD 800 billion and USD 1 trillion. As the country's data traffic and consumption expand, the demand for physical facilities to store this digital information also rises.
- In May 2022, ICRA (Investment Information and Credit Rating Agency of India Limited) stated that the capacity of the Indian data center industry is anticipated to rise by a factor of five to 3,900-4,100MW of capacity, with investments of INR 1.05-1.20,000 crore to be added in the next five years.
- Large companies outsourcing from India are majorly driving the demand for data centers. Large hyper-scalers, such as Amazon Web Services, Google, Microsoft, Facebook, IBM, Uber, Dropbox, etc., lead the growth of the Indian data centers (DC) market by outsourcing their storage requirements to independent DC providers.
- During the second wave of the pandemic, The Consortium for On-Board Optics (COBO) announced the creation of the Co-Packaged Optics (CPO) Working Group, which will encourage the adoption of co-packaged optics by developing technical guidance and standards for CPO implementations. This effort focuses on the optical connectivity and remote laser sources necessary to make co-packaged optics a reality, and it is complementary to other co-packaging standardization efforts.
- Further, in June 2021, Ayar Labs announced that it had successfully demonstrated the industry's first Terabit per second Wavelength Division Multiplexing (WDM) optical link with its TeraPHY optical I/O chiplet and SuperNova multi-wavelength optical source. The demonstration shows a fully functional TeraPHY chiplet with 8 optical ports running error-free without Forward Error Correction (FEC) for a total bandwidth of 1.024 Tbps and at less than 5 pJ/bit energy efficiency. This is a significant milestone in providing optical connectivity to meet the ever-growing bandwidth needs of data-intensive applications, low-power interconnects, and new innovative heterogeneous and disaggregated system architectures.
Co-packaged Optics Market Trends
Growth in High-performance Computing
- High-performance computing (HPC) uses parallel processing to run advanced application programs efficiently, reliably, and quickly. Newer workloads, such as genomic sequencing, machine learning, deep learning, speech and facial recognition, and pattern recognition, are being executed on HPC systems.
- The market has also been witnessing mergers and acquisitions by the major players to expand their offerings, further driving the co-packaged optics market. For instance, in June 2021, Hewlett Packard Enterprise announced that it had acquired Determined AI, a San Francisco-based start-up delivering a robust software stack to train AI models faster, at any scale, using its open-source machine learning platform. HPE will combine Determined AI's software solution with its AI and high-performance computing offerings to enable ML engineers to quickly implement and train machine learning models, primarily to provide faster and more accurate insights from their data in various industries.
- Also, in motorsports, vehicle designers have constantly been looking for the tiniest sliver of time to shave off through the usage of advanced engineering. Still, these advancements are getting more and more difficult to achieve. As of June 2021, D2H Advanced Technologies, an engineering firm with efforts in sports such as NASCAR, started working with Ohio Supercomputer Center to use supercomputing to supercharge its design work. Much of the work will be related to computational fluid dynamics, studying how air flows through and around multiple components of a motorsport vehicle.
- Additionally, in June 2021, Azure announced the general availability of its Azure ND A100 v4 Cloud GPU instances powered by NVIDIA A100 Tensor Core GPUs that help achieve leadership-class supercomputing scalability in a public cloud. The company also states that for demanding customers, who have been chasing the next frontier of AI and high-performance computing, scalability is very crucial to unlocking improved total cost of solution and time-to-solution, and the ND A100 v4 is primarily designed to let the most demanding customers scale up and scale out without slowing down.
- Multiple large banks have been leveraging AI on HPC systems in new approaches, rapidly processing more extensive data sets to recognize and prevent fraudulent transactions, further driving the studied market. The connections are optimized to ensure the clusters work quickly and in sync. For instance, in May 2021, ICICI Bank announced that it is adopting Artificial Intelligence and Machine Learning on a larger scale. In 2020, these technologies have reduced internal costs for the bank and helped significantly drive its deposit and lending growth, the bank's management stated during an earnings call with analysts. According to its financial results, the bank also reported a net profit of INR 4,402 crore in the fourth quarter of FY21, around 260.5% higher than in the previous year.
Asia Pacific is Expected to Hold Significant Market Share
- Operators in the data center industry are using various strategies to partake in India's digital expansion. The most prominent case is the rise in land acquisitions made by data center operators who sought out prime real estate to offer scalable alternatives for their clients, which resulted in a valuation of prices at various locations.
- For instance, in August 2022, Amazon Data Services Pvt Ltd leased 5.5 acres of freehold industrial land from L&T in Mumbai's Powai neighborhood for 21 years and six months. According to Propstack, records about the property indicate that Amazon intends to build a data center there. The monthly rent is Rs 3.57 crore. Amazon's city-center data center will be a crucial component in the economy of a global metropolis as firms are rapidly congregating in urban areas. It is also significant that Amazon opted to be in the center of a Mumbai suburban business sector when most data centers prefer to be situated on the outskirts of any city.
- In May 2022, The Ministry of Electronics and Information Technology (MeitY) will soon come out with a New Data Center Policy draft. As part of the policy framework, the Ministry is considering reducing the number of clearances needed for setting up a data center. Accordingly, plans are on to discuss the matter with central ministries and State governments for possible alignment on this subject. Data centers need about 40 clearances, which takes a lot of time.
- In March 2022, Energy producer ZR Power Holdings announced its plans to invest over INR 1,700 crore to develop a large data center at Mahape in Navi Mumbai in an upward revision of the investment agreed upon by the Maharashtra government last year. In December 2021, the Telangana-headquartered company signed an MoU with the Maharashtra government to spend over INR 1,200 crore for setting up two data centers, one each in Navi Mumbai and Pune.
- Further, the relocations and addition of several servers o meet the growing customer demand bolstered the market growth rate. For instance, in March 2022, NSE stated that it continually installed additional servers due to the increased trading volume, which takes up much room. The National Stock Exchange (NSE) has announced that it will build a dedicated data center outside of Mumbai and relocate the data and co-location servers to that facility. As part of this plan, the biggest stock exchange in the nation will also relocate its primary data center away from its current location.
Co-packaged Optics Industry Overview
The global co-packaged optics market is highly fragmented due to several significant players. In terms of market share, the major players currently dominate the market. These major players with prominent shares in the market are focusing on expanding their customer base worldwide. These companies leverage strategic collaborative initiatives to increase their market shares and profitability.
In September 2022, Molex launched a pluggable module solution for co-packaged optics (CPO). Its new External Laser Source Interconnect System (ELSIS) is a complete system of the cage, optical and electrical connectors with a pluggable module that uses proven technology to speed the development of hyperscale data centers. The company is currently sampling the ELSIS hybrid optical, electrical connector, and cage system, giving engineers a head start on development and testing before the Q3 2023 target to release the fully integrated solution.
In August 2022, Broadcom announced that it is partnering with Tencent to accelerate the adoption of high-bandwidth co-packaged optics switches. The company said it would deploy its first switch with optics inside, called Humboldt, in the cloud giant's data centers. The switches are based on a new architecture announced in early 2021 that brings co-packaged optical interconnects inside a traditional switch.
Co-packaged Optics Market Leaders
Ayar Labs, Inc.
Broadcom Inc.
Cisco Systems, Inc.
IBM Corporation
Intel Corporation
*Disclaimer: Major Players sorted in no particular order
Co-packaged Optics Market News
- March 2023: Quantifi Photonics Ltd launched the Laser 1300 Series of compact, scalable CW-WDM MSA-compliant laser test sources, designed to enable the CW-WDM ecosystem and accelerate the adoption of multi-wavelength technology across emerging applications such as artificial intelligence (AI), high-performance computing (HPC) and high-density optics.
- September 2022: SABIC launched EXTEM RH1016UCL resin, a new ultra-high-heat, near-infrared (IR)-transparent grade well-suited for injection-molded lenses used in co-packaged optical transceivers and other optical connectors at the ECOC Exhibition 2022.
Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Value Chain Analysis
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
4.4 Assessment of Impact of COVID-19 on the Industry
4.5 Impact of Latency-Sensitive Traffic on Demand for CPO
4.5.1 AI and Machine Learning in the data center
4.5.2 5G, CPO and the impact on the data center
4.5.3 Video conferencing and online events
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Increase in Adoption of Smart Devices and Rise in Data Traffic
5.1.2 Growth in the Importance of Mega Data Centers
5.1.3 Growth in High-performance computing
5.2 Market Restraints
5.2.1 Increase in Network Complexity
5.2.2 Device Compatibility and Sustainability Issues
6. MARKET SEGMENTATION
6.1 By Data Rates
6.1.1 Less than 1.6T
6.1.2 1.6T
6.1.3 3.2T
6.1.4 6.4T
6.2 By Geography
6.2.1 North America
6.2.2 Europe
6.2.3 Asia-Pacific
6.2.4 Rest of the World
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 Ayar Labs, Inc.
7.1.2 Broadcom Inc.
7.1.3 Cisco Systems, Inc.
7.1.4 IBM Corporation
7.1.5 Intel Corporation
7.1.6 Microsoft Corporation
7.1.7 TE Connectivity
7.1.8 Furukawa Electric Co., Ltd.
7.1.9 Hisense Broadband Multimedia Technology Co., Ltd.
7.1.10 POET Technologies
7.1.11 Kyocera Corporation
7.1.12 Huawei Technologies Co., Ltd.
7.1.13 SENKO Advanced Components, Inc.
7.1.14 Sumitomo Electric Industries, Ltd.
- *List Not Exhaustive
8. INVESTMENT ANALYSIS
9. FUTURE OUTLOOK OF THE MARKET
Co-packaged Optics Industry Segmentation
Co-packaged optics is an advanced heterogeneous integration of optics and silicon on a single packaged substrate to address next-generation bandwidth and power challenges. CPO brings together a broad range of expertise in fiber optics, switch ASICs, digital signal processing (DSP), and state-of-the-art packaging & test to provide disruptive system value for the data center and cloud infrastructure.
The study includes different kinds of data rates, such as less than 1.6T, 1.6T, 3.2T, and 6.4T for various geographies. The competitive landscape takes into account multiple companies' market penetration, as well as their organic and inorganic growth strategies. The study also considers the market impact of the COVID-19 pandemic. Further, the study tracks the unit shipments of co-packaged optics and the revenue. For all of the above segments, market sizes, and forecasts are provided in terms of value (USD million).
| By Data Rates | |
| Less than 1.6T | |
| 1.6T | |
| 3.2T | |
| 6.4T |
| By Geography | |
| North America | |
| Europe | |
| Asia-Pacific | |
| Rest of the World |
Frequently Asked Questions
What is the current Co-packaged Optics Market size?
The Co-packaged Optics Market is projected to register a CAGR of 75.20% during the forecast period (2024-2029)
Who are the key players in Co-packaged Optics Market?
Ayar Labs, Inc., Broadcom Inc. , Cisco Systems, Inc., IBM Corporation and Intel Corporation are the major companies operating in the Co-packaged Optics Market.
Which is the fastest growing region in Co-packaged Optics Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in Co-packaged Optics Market?
In 2024, the North America accounts for the largest market share in Co-packaged Optics Market.
What years does this Co-packaged Optics Market cover?
The report covers the Co-packaged Optics Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Co-packaged Optics Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Co-packaged Optics Industry Report
Statistics for the 2024 Co-packaged Optics market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Co-packaged Optics analysis includes a market forecast outlook to for 2024 to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
