5G Optical Transceiver Market Size, Share, and Trends 2024 to 2033

5G Optical Transceiver Market Size, Growth

The global 5G optical transceiver market size was USD 1.84 billion in 2023, calculated at USD 2.39 billion in 2024 and is expected to reach around USD 25.27 billion by 2033. The market is expanding at a solid CAGR of 29.95% over the forecast period 2024 to 2033. The growing demand for 5G is expected to drive the deployment of 5G optical transceivers in 5G infrastructure, thereby driving the 5G optical transceiver market.

5G Optical Transceiver Market Key Takeaways

• The North America 5G optical transceiver market size reached USD 660 million in 2023 and is expected to attain around USD 9.22 million by 2033, poised to grow at a CAGR of 30.17% between 2024 and 2033.
• North America has held a largest revenue share of 36% in 2023.
• Asia Pacific is anticipated to showcase significant growth with the highest CAGR in the market in the upcoming period.
• By type, the 25G transceivers segment has contributed more than 32% of revenue share in 2023.
• By type, the 400G transceivers segment is expected to grow significantly in the market over the forecast period.
• By form factor, the SFP56 form factor segment has recorded the highest revenue share of 30% in 2023.
• By form factor, the QSFP28 segment is anticipated to grow significantly during the forecast period in the market.
• By wavelength, the 1310 nm band segment has generated more than 45% of revenue share in 2023.
• By wavelength, the 850 nm band segment is estimated to grow significantly over the forecast period.
• By 5G infrastructure, the 5G fronthaul segment dominated the market with a major revenue share of 74% in 2023.
• By 5G infrastructure, the 5G midhaul/backhaul segment is projected to show substantial growth in the market during the projected period.

U.S. 5G Optical Transceiver Market Size and Growth 2024 to 2033

The U.S. 5G optical transceiver market size was exhibited at USD 460 million in 2023 and is projected to be worth around USD 6,500 million by 2033, poised to grow at a CAGR of 30.32% from 2024 to 2033.

North America registered the largest revenue share of the 5G optical transceiver market in 2023. The demand for 5G infrastructure in the U.S. and Canada is driving regional market growth. Key market players are introducing 5G-compatible optical transceiver portfolios, further fueling this expansion. The increasing deployment of 5G in Canada is rising innovation, development, and investment in 5G infrastructure. The growing adoption and deployment of 5G technology have a positive impact on the regional industry.

Asia Pacific is anticipated to showcase significant growth with the highest CAGR in the 5G optical transceiver market in the upcoming period. The adoption of 5G in the Asia Pacific region is driving innovation, development, and investment. The implementation of 5G is expected to contribute significantly to regional industrial growth. The importance of data center operations is increasing among large enterprises and government agencies in APAC. Several data centers in the region are already operated by cloud service providers (CSPs) and colocation vendors. Telecom vendors like NTT DATA and China Telecom, along with certain global IT service firms, manage most of the data centers in this region.

• In September 2023, consumer electronics major Motorola launched a new Edge 40 Neo series 5G phone in India.  It also features dual SIM slots, a USB Type-C port, and stereo speakers tuned with the Dolby Atmos system. The device comes with an IP68 water- and dust-resistant rating, too.

Market Overview

A 5G optical transceiver is a device that enables high-speed data transmission over 5G wireless networks using optical signals. With the installation of base stations and advancements in 5G technology, there will be a significant rise in the demand for optical devices used in communication networks. Optical transceivers, also known as fiber optic transceivers, are crucial interconnect components that transmit and receive data. They utilize fiber optic technology to convert electrical signals into light and vice versa. The front, backhaul, and midhaul components of 5G infrastructure heavily rely on optical transceivers. The market is expected to grow due to the increasing demand for 5G technology and the deployment of optical transceivers in 5G networks.

5G Optical Transceiver Market Growth Factors

• The demand for 5G is expected to rise significantly globally, which is expected to drive the 5G optical transceiver market.
• The growing demand for 5G infrastructure can fuel the 5G optical transceiver market growth during the forecast period.
• The growing utilization of Silicon-Photonic technology can boost market growth further.
• Increasing investments in advanced technology can contribute to market expansion shortly.

5G Optical Transceiver Market Scope

5G Optical Transceiver Market Dynamics

Driver

Growth in cloud computing

Due to the growth of cloud computing and the increasing use of data-intensive applications, there has been a significant expansion in the number of data centers worldwide. Optical transceivers play a critical role in the infrastructure of these data centers by facilitating high-speed data transfer between servers and storage systems.

The rise in demand for Internet of Things (IoT) devices has resulted in a proliferation of connected devices, creating a need for faster and more reliable wireless networks. Optical transceivers are essential components in IoT devices such as sensors, cameras, and smart home appliances, which enable them to communicate with other devices and the cloud.

• In June 2023, Huawei announced they would launch a complete set of commercial 5.5G network equipment in 2024 at the 5G Advanced Forum during MWC Shanghai 2023.5G deployment progressed rapidly over the past four years and is already yielding significant financial gains.

Restraint

High initial development costs

The substantial initial installation expenses are a major factor that could hinder the growth of the 5G optical transceiver market. Setting up 5G networks and deploying optical transceivers require significant investments in infrastructure and equipment. The high costs associated with constructing and upgrading network infrastructure, including fiber-optic cables, base stations, and optical transceivers, can pose a significant barrier, particularly for smaller network operators or those operating in economically constrained regions.

Opportunity

The migration of OTNs toward WDM architecture

Optical transport networks (OTNs) are transitioning from SONET technology to wavelength-division multiplexing (WDM) architecture, particularly dense WDM (DWDM). The deployment of DWDM systems by carriers has been highly beneficial. It allows for the transmission of multiple wavelengths over a single fiber, significantly increasing capacity. This advancement enables network operators to reduce the cost associated with deploying multiple network overlays for different services or a single-channel network. These factors are expected to positively impact the 5G optical transceiver market during the forecast period.

• In March 2023, Huawei showcased its full series of 400G WDM solutions to customers. These solutions support various application scenarios such as ultra-high performance, ultra-high integration, and ultra-large capacity, helping operators build transmission networks with the optimal per-bit cost.

Type Insights

The 25G transceiver segment dominated the 5G optical transceiver market in 2023. As the number of 5G macro base stations increases, the demand for 25G optical transceivers is expected to rise, driving the segment’s growth over the forecast period. 25G transceivers are ideal for 5G front-haul connections, which utilize direct fiber connections due to their network construction efficiency. These transceivers employ wavelength division multiplexing (WDM) technology to combine multiple wavelengths into a single fiber.

• In September 2022, Source Photonics unveils 25G/50G PON transceivers at ECOC. The OLT devices leverage the company’s high-power optical EML chips and electrical IC chipsets to support downstream speeds of up to 50 Gbps and upstream speeds of up to 25 Gbps.

The 400G transceiver segment is expected to grow significantly in the 5G optical transceiver market over the forecast period. The IEEE approved a 400G standard in 2017, prompting equipment manufacturers to develop cost-effective technology. The demand for data-intensive services has accelerated the development of 400G technology. These 400G transceivers are prepared for future upgrades to 800G and offer significantly higher speeds than 100G and 200G. Despite the high initial investment, the capability of 400G technology to upgrade to 800G is expected to drive segment growth throughout the projected period.

Form Factor Insights

The SFP56 form factor segment dominated the 5G optical transceiver market in 2023. This can be linked to Optical transceivers with the SFP56 form factor, which are widely used in 5G infrastructure due to their compatibility with both 50G and 25G connections. They are favored for their high-speed connectivity, reliable performance, and superior quality. In response to the growing demand for SFP56 in 5G applications, leading market players are introducing new product portfolios.

• In March 2022, Source Photonics introduced its 50G SFP56 optical transceivers. The product portfolio was once explicitly launched for 5G fronthaul networks.

The QSFP28 segment is anticipated to grow significantly during the 5G optical transceiver market in the forecast period. This is due to Video streaming and gaming on 5G networks demanding low latency. QSFP28 optical transceivers, with their compact form factors, reduce cable and space costs by lowering all expenses. The segment's growth is driven by its high data rate compatibility, low latency, and cost-effectiveness.

Wavelength Insights

The 1310 nm band segment dominated the 5G optical transceiver market in 2023. The properties of the 1310nm band are driving the growth of this segment. These connections link the core network with the cell site, which is essential for transporting large volumes of data. The 1310nm wavelength optical transceivers are primarily used in 5G infrastructure for high-speed backhaul connections.

The 850 nm band segment is estimated to grow significantly in the 5G optical transceiver market over the forecast period. 5G infrastructure employs 850nm band optical transceivers to connect small cells or in-building distributed antenna systems. These transceivers use multimode fiber optic cables for short-distance connectivity and provide better bandwidth and lower costs. Their affordability and availability make 850nm transceivers suitable for 5G infrastructure, driving the growth of this segment.

5G Infrastructure Insights

The 5G fronthaul segment dominated the 5G optical transceiver market in 2023. These transceivers offer high data rates, low latency, and cost-effectiveness, making them an ideal choice for supporting 5G infrastructure. 5G networks have been commercialized and adopted worldwide, with millions of 5G base stations already deployed globally. To meet the demand for these base stations, network operators have turned to optical transceivers.

The 5G midhaul/backhaul segment is projected to show substantial growth in the 5G optical transceiver market during the projected period. The compatibility of optical transceivers with 5G network infrastructure drives their adoption in the 5G midhaul and backhaul segments. 5G midhaul and backhaul are supported through the metro access, core, and convergence layers, commonly utilizing 50G/100G transceivers. Additionally, these transceivers trigger high-speed data transmission for applications such as video streaming, virtual reality, and augmented reality.

5G Optical Transceiver Market Companies

• II-VI Coherent Corp.
• INNOLIGHT
• HiSilicon Optoelectronics Co., Ltd.
• Cisco Acacia Communications, Inc.
• Hisense Broadband, Inc.
• Broadcom.
• Source Photonics
• Juniper Networks, Inc.
• Eoptolink Technology Inc.
• Molex, LLC
• Accelink Technology Co. Ltd
• Fujitsu Optical Components Limited

Recent Developments

• In March 2024, Nokia is introducing a new line of optical transport solutions specifically designed for metro edge deployments, catering to Communication Service Providers (CSPs), webscale companies, and Enterprise customers.
• In March 2022, Lumentum, a global optical transceiver company headquartered in the U.S., established a strategic collaboration agreement with Ayar Labs Inc. The collaboration aimed to deliver high-volume continuous-wave wavelength division multiplexing multi-source agreement (CW-WDM MSA)-compliant external laser sources.
• In October 2023, Aker Solutions and Subsea7 reported the completion of their joint venture, officially closing the deal. The newly formed entity is operating under the name OneSubsea and intends to revolutionize subsea production by fostering innovation and enhancing efficiency

Segments Covered in the Report

By Type

• 25G Transceivers
• 50G Transceivers
• 100G Transceivers
• 200G Transceivers
• 400G Transceivers

By Form Factor

• SFP28
• SFP56
• QSFP28
• Others (QSFP56, CFP2, CFP8)

By Wavelength

• 850 nm Band
• 1310 nm Band
• Others (CWDM, DWDM, LWDM, 1270nm, 1330 nm)

By Distance

• 1 to 10 Km
• 10 to 100 Km
• More than 100 Km

By 5G Infrastructure 

• 5G Fronthaul
• 5G Midhaul/Backhaul

By Geography

• North America
• Asia Pacific
• Europe
• Latin America
• Middle East & Africa