Introduction and Application of Optical Modules

Aim：This POST is mainly to allow ResearchHub users to have a simple understanding of optical modules and understand the application scenarios of optical modules and their share and prospects in the future application market.

Optical Modules

Optical module, also known as optical transceiver module, is a device that can complete the conversion between optical signals and electrical signals. Optical modules generally consist of a transmitter and a receiver. The transmitter can convert electrical signals into optical signals and send them out, while the receiver can receive optical signals and convert them into electrical signals. The main function of optical modules is to realize photoelectric conversion in optical communication systems. It is an important part of modern communication networks, allowing data to be transmitted at higher speeds and over longer distances through optical

The composition of the optical module

Optical modules are mainly packaged by optoelectronic devices TOSA/ROSA, functional circuits and optoelectronic interface components. Among them, the optical transceiver component TOSA/ROSA is the core part of the optical module. The optical emission component TOSA mainly completes the conversion of electrical signals into optical signals. After processing the received electrical signals with a certain code rate through the internal driver chip, it drives the semiconductor laser (LD) or light-emitting diode (LED) to emit a modulated optical signal at the corresponding rate. . The optical receiving component ROSA mainly completes the conversion of optical signals into electrical signals. After the optical signal with a certain code rate is input into the module, it is converted into an electrical signal by the light detection diode, and the electrical signal with the corresponding code rate is output after passing through the preamplifier.

Classification of optical modules

According to the transmission rate: it can be divided into 155M optical module, 1.25G optical module, 10G optical module, 25G optical module, 40G optical module, 100G optical module, 200G optical module, 400G optical module, 800G optical module, and 1.6T optical module.
According to the packaging form: it can be divided into SFP optical modules, SFP+ optical modules, SFF optical modules, QSFP+ optical modules, QSFP-DD, OSFP optical modules, etc.
According to the transmission distance: it can be divided into short-distance optical modules, medium-distance optical modules and long-distance optical modules.
At work, optical modules are divided into line-side optical modules and customer-side optical modules. The equipment used to aggregate signals to the backbone optical fiber transmission network link is the line-side equipment, and the corresponding optical module is called the line-side optical module. On the contrary, if it is the external interface of the transmission network and is used to connect to the user's device, it belongs to the client side.

Application scenarios of optical modules

Data center: Data center is one of the important application scenarios of optical modules. With the rapid development of cloud computing and big data technology, the demand for high-speed and efficient optical modules in data centers continues to grow. By using high-speed optical modules, data centers can achieve efficient data transmission and backup. At the same time, data centers also need high-density, low-power optical modules to meet their high-density deployment, energy conservation and environmental protection needs.
Communication network: Communication network is one of the main application scenarios of optical modules. From optical fiber access, mobile communications to broadband networks, optical modules are required. In communication networks, optical modules can achieve high-speed, long-distance optical signal transmission and conversion, improving the performance and reliability of communication networks. At the same time, with the development of 5G communication technology, the demand for high-speed, miniaturized, and low-power optical modules is also growing.
Industrial automation: In the field of industrial automation, optical modules are required for fast communication and control of sensors and actuators. By using optical modules, high-speed, reliable data transmission and signal processing can be achieved, improving the efficiency and accuracy of industrial automation systems. At the same time, the industrial automation field also requires optical modules with high reliability and environmental resistance to meet its harsh working environment requirements.
Instrumentation: In scientific fields such as physics, chemistry, biology, etc., high-speed and precise measurements and tests are required. By using optical modules, high-speed and reliable data collection and transmission can be achieved, and are widely used in various instruments and test equipment. At the same time, the instrumentation field also needs miniaturized, low-power optical modules to meet its portable and long-term working needs.
Security monitoring: In the fields of security monitoring such as video surveillance and airport security, high-speed and high-definition video transmission and processing are required. By using optical modules, high-speed and reliable video collection and transmission can be achieved, improving the real-time and accuracy of the monitoring system. At the same time, the security monitoring field also requires low-illumination, wide-dynamic-range optical modules to meet its monitoring needs at night or under low-light conditions.

Market share of optical modules

As the amount of global data continues to grow, the optical module market continues to expand. The market size will reach US$9.6 billion in 2022, and the market size may reach US$12 billion by 2025. The telecommunications side market is expected to increase from US$2.636 billion in 2020 to US$3.985 billion in 2025, and the data center optical module market will grow from US$3.504 billion to US$7.333 billion.

Global market size. Currently, the amount of data worldwide is showing a rising trend, which will drive the optical module market capacity to continue to expand. According to data from Light Counting, the global optical module market size will be approximately US$9.6 billion in 2022, a year-on-year increase of 9.09%. Beginning in 2023, 800G is expected to drive a new round of growth and provide strong support for the global optical module industry market size to reach US$12 billion in 2025.
Global telecommunications side optical module market size. Optical modules are an indispensable component of modern telecommunications networks. They support the continued development and innovation of the telecommunications industry by providing high-speed, efficient, and reliable data transmission. According to data from Light Counting, the global telecommunications side optical module market size was US$2.636 billion in 2020 and is expected to grow to US$3.985 billion by 2025, with an average annual compound growth rate of approximately 8.62%.
Global data center optical module market size. The data center is the core of the computing infrastructure. As the core component of the computing infrastructure, optical modules may see an increase in demand growth. According to data from Light Counting, the global data center optical module market size was US$3.504 billion in 2019 and may grow to US$7.333 billion by 2025, with an average annual compound growth rate of 13.09%.

Future market development of optical modules

The development of silicon photonics technology, the increase in demand for AI computing power, the expansion of the optical transceiver module market and the increase in demand for supporting optical communication devices have jointly promoted the rapid development of the optical module industry. It is expected that by 2026, the silicon photonics technology market share will reach 50%. The optical transceiver module market is expected to increase from US$10.2 billion in 2021 to US$24.7 billion in 2027, among which the demand for 800G optical modules is particularly significant. In addition, the demand for high-speed optical modules and related optical communication devices is growing with the upgrade of Ethernet switch ASICs.

Silicon photonics technology achieves bottleneck breakthrough. Traditional optical modules are essentially "electrical interconnections". As the processing size of transistors continues to shrink, electrical interconnections will gradually face transmission bottlenecks, and silicon photonics technology emerged as the times require. Silicon photonic technology has outstanding advantages such as high speed, low power consumption, and high integration, and is more suitable for the production of higher-speed optical modules in the future. In 2020, silicon optical modules accounted for less than 20% of the overall optical module market. It is expected that by 2026, the competitive advantages of silicon optical technology will continue to become more prominent as demand continues, and the market size is expected to account for 50%.
AI computing power drives demand. As ChatGPT sets off a new wave of large AI models around the world, technology giants represented by Microsoft, Google, and Amazon have stepped up their efforts in AI construction. AI servers generally require computing performance of up to 2 quadrillion times per second, so they have higher requirements for the transmission rate and latency of underlying data. This promotes the deployment of the Fat-tree architecture in data center networks to drive optical modules. Upgrade to higher speeds. Currently, 800G optical modules, as core components of high-performance computing networks, have taken the lead in leading the explosion in demand for computing power.
Optical transceiver modules drive development. The optical transceiver module market will reach a scale of US$10.2 billion in 2021 and is expected to grow to US$24.7 billion by 2027, with a compound annual growth rate of 16%. This growth is mainly due to the widespread adoption of high-speed 400G and 800G modules by large cloud service operators, as well as the continued high demand for wireless optical transceiver modules for 5G networks by national telecom operators. Ethernet optical transceiver modules are the largest market segment for optical transceiver modules. The world's top five cloud vendors (Alibaba, Amazon, Facebook, Google and Microsoft) have laid out their plans, and their expenditures have increased from US$1.4 billion in 2020 to more than US$3 billion in 2026. USD, 800G optical modules will dominate this market segment starting from the end of 2025.