Co-packaged Optics Market Size

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.