Cordacord Industry Research Center, or C&C, a market consulting firm specializing in optical communications industry research, has released its latest “Optical Chips for Optical Communications Market Research Report 2023”, and the latest report shows that the global optical chips market size in 2023 reached CNY 15.4 billion (approx. US$2.2 billion) in 2023, down 15% from 2022. This market shrinkage is mainly affected by the simultaneous decline in demand and price for optical chips in the access network market. Nonetheless, the continued demand for high-rate optical chips in the AI-driven data center market mitigated the downward pressure on the market to some extent. The global optical chip market is expected to see a strong recovery in 2024, with the market size expected to grow by more than 50%, which would be the highest growth recorded in years. According to the forecast, the compound annual growth rate (CAGR) of the global optical chip market will reach 14.86% between 2023 and 2027, far exceeding last year's market expectations.
This positive market outlook is due to several key factors: firstly, AI is driving changes in the optical communication product mix, and the demand for high-speed optical communication solutions will continue to grow, from the chip era, in which 25G bps was the mainstay, to the 100Gbps era, which is driving the scale commercialization of 200Gbps optical chips. Secondly, AI-driven data centers, telecom operators metropolitan network expansion, as well as the access network market to move towards a higher speed rate of 50G PON, further promoting the market growth space of optical chips. Finally, technological breakthroughs and capacity expansion of more vendors in the field of high-speed optical chips drive the extension of optical communication technology to more fields. Overall, although the global optical chip market suffered a short-term decline in 2023, the industry is ushering in a new round of development opportunities as AI applications drive technological innovation and growing market demand. The global optical chip market is expected to maintain steady growth in the coming years, bringing new vigor and momentum to the entire optical communication industry.
In China's optical chip manufacturing sector, the annual sales scale reached RMB 4.5 billion in 2023, down 21% compared with 2022. This decline was mainly due to the fact that the access network market, which is dominated by China's optical chip makers, suffered a volume and price decline in the first three quarters. Although the market rebounded quickly in the fourth quarter, it was still unable to fully offset the overall downward trend. However, looking ahead to 2024, the market is expected to see rapid recovery and growth opportunities as industrial PON technology becomes more widespread and demand for 100G/400G optical modules for domestic arithmetic networks grows.
In terms of the competitive landscape, based on the performance of various manufacturers in 2023, we note that among the top 10 optical chip manufacturers in China, optical module vendors with in-house optical chip manufacturing capabilities dominate the market. These companies rely on their mature process technologies and strong vertical integration capabilities to gain a favorable position in market competition.
Chinese vendors dominate the access network market
According to application scenarios and optical chip rates, Chinese optical chip vendors dominate the access network market. The growth of the optical access network market mainly comes from FTTR, Gigabit upgrades, FTTH expansion, etc., and the corresponding demand for optical chips is mainly 2.5Gbps, 10Gbps DFB, APD, PD, MPD chips, and this market is almost monopolized by Chinese enterprises. In the InP laser market for access network applications, according to the statistics of sales volume, in the 2.5Gbps rate segment, Sinocore holds the first place with its 26% market share, showing its leading position and strong market competitiveness in this field. It is closely followed by Minxin, Optronics and Yuanjie Technology.
In the 10Gbps rate DFB/EML chip segment, Yuanjie Technology occupies the first place in the market, followed by Hebei Jiewei, Guanglong Technology, Yunling Optoelectronics, and Minxin together occupy a certain market share, and other vendors contain self-developed chips from Hisense, Haisi, and Solstice.
In terms of receiving photodetectors, we counted the 2.5G PD/APD market, 10G APD, 10G PIN-PD and MPD chip market for backlight detection, and in general the competition is relatively more concentrated.
Among them, in the 2.5G PD/APD market, Lightsun Electronics dominated with more than 30% share, and the top three companies, Lightsun Electronics, Sanan Integration, and CoreSmart, accounted for 76% of the market, and the competitors in this market also include Hebei Jiewei, Minxin Semiconductor, Zhongke OptoCore, and Cloud Ridge Optoelectronics, among others.
In the field of 10Gbps photodetectors, APD and PD chips are used in different scenarios. 10G APD is mainly used in FTTR, XG/XGS GPON ONU and OLT scenarios, etc. CoreSigma, with its excellent technical strength and market share advantage, holds the position of market leader with a share of more than 20%. It is closely followed by Lightsun Electronics and Wuhan Minxin. The players in this field also include many excellent competitors such as Sanan Integration, OPTOTECH, Hebei Jiewei, Albis, Optronics, MACOM, and Dingyuan Optoelectronics.
As for the 10G PIN-PD field, it is mainly used in high-bandwidth transmission equipment, such as 10Gbps optical modules, 10G Ethernet optical modules, OTDR (Optical Time Domain Reflector), and optical terminators, etc. In this market, Hebei Kuangtseen is firmly in the market leadership position with more than 40% of the market share, while Hebei Jiewei and San'an Integration are ranked the second and the third, and the three companies account for more than 70% of the market share.
AI Accelerates High-Speed Optical Chip Iteration Chinese Optical Chip Vendors Usher in Data Center Market Breakthrough Opportunities
According to our estimation, following the AI-driven data center optical module market demand, the global data center market optical chip demand is expected to grow rapidly from $700 million in 2023 to $2 billion in 2025. With the rapid development of AI technology, the iterative demand for high-speed optical chips is becoming increasingly urgent, and Chinese optical chip manufacturers are standing at a new development wind. the drive of AI technology not only accelerates the progress of optical chip technology, but also brings unprecedented market opportunities for Chinese manufacturers. In this wave, the global data center optical chip (especially high-speed optical chip) capacity is tight, the expansion cycle is long, and with the long-term technology accumulation and customer opportunities, domestic optical chip manufacturers are actively embracing the change, ushering in a breakthrough opportunity to enter the high-speed data center market.
This breakthrough includes single-wave 100G EML chip, single-wave 100G PIN-PD chip, 56G PAM4 VCSEL chip and CW DFB chip for silicon optical platform, SiP silicon-based modulator chip, and to the next generation of higher-speed modulation chip, Chinese manufacturers have done enough thin-film lithium niobate technology reserves.
It is worth mentioning that in terms of single-wave 100G PIN-PD, domestic vendors such as SiFotonics, CoreSigma and other companies have already obtained bulk commercial orders in the past 2023, and are expected to welcome a larger market space this year. In terms of single-wave 100G EML laser cores, Yuanjie Technology has already obtained bulk purchases from large customers, and Changguang Huaxin has also sent samples to some customers for testing this year; in terms of 56G VCSEL chips, Huaxin Semiconductor has already realized bulk deliveries, and Eagle Semiconductor and Zhejiang RuiXi have also obtained certification tests from some customers. The report also synthesizes statistics on silicon modulator chip manufacturers and thin-film lithium niobate chip manufacturers. Currently, the number of optical chip vendors engaged in China has exceeded one hundred. Under an ideal environment that excludes interference from political factors, China's optical chip vendors are in a period of unprecedented growth and at the forefront of technological innovation. We have reason to believe that with continuous technological breakthroughs and market expansion, China's optical chip vendors will play a key role in the future optical communications market and become an important force driving the continuous progress and innovation of the entire industry. This growth and technological breakthroughs not only highlight the vitality of China's optical chip industry, but also signify China's growing influence in the global optical communication field. With continuous technological innovation and expanding market demand, China's optical chip makers are expected to demonstrate even more outstanding competitiveness on the international stage, contributing China's wisdom and strength to the development of the global optical communication industry.
Link to original article：C&C报告：受益AI高速光模块需求 2024年全球光芯片市场规模有望增长53% (qq.com)
