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Rising adoption of the cloud infrastructure is among the most essential reasons that is propelling the optical Interconnects market share. Cloud-based storage services such as platform-as-a-service (PaaS) and storage-as-a-service (SaaS) offers improved scalability by expertly managing the complicated data and storing them for future usage.
Additionally, cloud service providers are embracing advanced equipment such as optical interconnect to offer high processing speed and storage capabilities. The adoption of optical interconnect over networking infrastructure is comparatively cost-effective as it consumes less power. Therefore, optical interconnect will continue to witness a significant demand in near future.
Optical interconnect technology is an interface amid optical and fiber equipment. This technology supports taking signals from network equipment and perform signal processing for conversion of digital signals to optical signals for transmission in the fiber network. Applications of fiber optical interconnect for next-generation undersea transmission systems are likely to drive the market growth at a swift pace.
Undersea telecommunication systems entail a greater interconnects to split and combine the light source for simpler transmission. With the rising investments in next-gen undersea telecommunication systems, demand for fiber optical interconnects will continue to reduce the concerns such as cable damage by sharks and ship anchors.
Over the recent past, global data traffic has substantially increased. The modern-day Internet is no longer only about connectivity. Internet in the age of the COVID-19 has become reliable connectivity with lower latency, faster speed, and higher bandwidth. Amid the recent pandemic outbreak, consumers are more online than usual.
This has critically impacted the Wi-Fi access points causing congestions and increasing burdens on interconnecting points. Thus, companies are rapidly purchasing optical interconnects to reduce the sudden impact created on interconnects.
This pandemic has resulted into increased demand for optical interconnect and this trend is likely to be seen in the near future. However, production related to all fiber optics related products has dropped by 25% in this pandemic situation, owing to the limitations in supply of raw materials and finished goods. Thus the market is anticipated to decline by 4-5% in 2020, and is expected to recover by Q1-Q2 of 2021.
Growing Need for Increased Bandwidth Capacity to Trigger the Optical Interconnect Demand
Increasing demand for advanced bandwidth requirements is contributing as the major factor boosting the optical interconnect market. With the reduced power consumption within data center networks, bandwidth capacity needs to be enhanced.
This has largely increased the demand for efficient interconnects. As a result, development of hyper scale datacenters around the globe is further escalating the growth of the optical interconnects market.
At present, major cloud service providers such as Microsoft, Amazon Web Services, and Google Inc., are executing high data rate optical interconnects in their datacenters. Moreover, emergence of wireless communications, driverless vehicles, and smart gaming are expected to surge data traffic across networks. This, in turn, will lead to an upsurge in the demand for optical interconnects.
Huge Costs Associated with Applications of Optical Interconnect to Hamper Market Growth
Around the globe, cost has always been a major obstacle hindering the growth of the optical interconnects market. High costs related to application of optical interconnect technologies have negatively impacted the commercialization of this technology. Therefore, cost will remain a major factor restraining market growth.
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Examples of some of the market participants in the global optical interconnect market identified across the value chain include NVIDIA Corporation, Fujitsu Ltd., Juniper Networks, Inc., Broadcom Inc., Lumentum Operations LLC, Molex LLC, Sumitomo Electric Industries, Ltd., Fiberplex Technologies, LLC and others.
Following are some key strategies and developments in the global optical interconnect market:
North America will continue to hold a major share in the global optical interconnect market. Increased penetration of the internet results in higher usage of data center networks, which utilizes optical interconnects and hence the market would grow significantly in this region.
In addition, existence of big internet-based giants such as Google and Facebook has been a major factor driving the growth of the market in North America. Moreover, South Asia & Pacific is expected to grow significantly over the forecast period. Rising technological advancement along with growing Internet penetration is propelling the market growth in this region.
The optical interconnect market report is a compilation of first-hand information, qualitative and quantitative assessment by industry analysts, and inputs from industry experts and industry participants across the value chain.
The report provides in-depth analysis of parent market trends, macro-economic indicators, and governing factors, along with market attractiveness as per segment. The market report also maps the qualitative impact of various market factors on market segments and geographies.
