Optical Interconnect Market (2024

Market Overview & Forecast

The optical interconnect market, valued at US$ $14.5 billion in 2022, is projected to reach US$ $29.3 billion by 2031, registering a strong 13.2% CAGR from 2024 to 2031, according to DataM Intelligence.

This surge is driven by rapid data growth worldwide, fueled by hyperscale data centers, edge computing, high-performance computing (HPC), telecom infrastructure modernization, and artificial intelligence (AI) workloads. As copper interconnects face speed and power limitations, optical solutions are becoming the preferred alternative, delivering higher bandwidth, lower latency, and greater energy efficiency.

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Market Trends & Developments

Recent industry estimates place the market above US $15.5 billion in 2023, on track to surpass US $30.2 billion by 2030, with CAGR projections ranging between 11.2% and 13.15%.

North America remains the largest contributor with a 38–39% share, while Asia-Pacific stands out as the fastest-growing region. The market is undergoing a technological transformation, thanks to innovations such as silicon photonics, co-packaged optics (CPO), and ultra-high-speed transceivers (400G and 800G).

Key developments include:

AMD’s acquisition of Enosemi to expand its silicon photonics capabilities.
Nvidia’s roadmap for co-packaged optics, with large-scale deployment anticipated around 2028
TDK’s breakthrough in spin photodetector technology, setting new performance benchmarks in optical communication for AI and data-intensive environments.

Market Segmentation

The optical interconnect market is segmented by product type, application, and geography.

By Product Type:

Optical transceivers
Active optical cables (AOCs)
Embedded optical modules
Silicon photonics
Free-space optics
Cable assemblies (leading due to cost-effectiveness and ease of deployment)

By Application:

Data communications (cloud computing, data centers, HPC)
Telecommunications infrastructure

Among these, data communications is expanding fastest, driven by AI, content delivery, and enterprise cloud growth. Silicon photonics is rapidly emerging as a key technology for enabling low-latency, power-efficient interconnects.

Regional Insights

United States

The U.S. leads the global market, accounting for nearly 39% of global revenue in 2023. This dominance stems from large-scale investments by major cloud and AI infrastructure providers like Amazon, Microsoft, and Google. The region is also witnessing an increase in collaborations between semiconductor and optics companies, as seen in AMD's acquisition of Enosemi.

Japan

Japan is becoming a global center for optical innovation. TDK's development of a spin photodetector has opened new avenues in ultra-fast optical systems. Backed by public sector support and growing demand for AI-driven data centers, Japan is expected to see significant market expansion, especially in compact and high-speed photonic solutions

Market Highlights

Current Market Size: US $14.5 billion (2022)
Forecast: Expected to reach US $29.3 billion by 2031
Growth Rate: 11–13.2% CAGR
Key Growth Segments: Cable assemblies, data communications, and silicon photonics
Leading Regions: North America (revenue share), Asia-Pacific (growth rate), Japan (innovation hub)
Key Trends: Co-packaged optics, 400G–800G transceivers, chip-scale integration, energy-efficient solutions

Competitive Landscape

Prominent players driving market growth include:

Broadcom
Amphenol Communication Solutions
Coherent Corp.
Fujitsu Limited
Lumentum Operations

Other influential companies in the ecosystem:
Molex, NVIDIA, TE Connectivity, Smiths Interconnect, Intel, Cisco, Corning, and Sumitomo Electric.

Recent Strategic Moves:

AMD reinforced its co-packaged optics strategy through the Enosemi acquisition.
Nvidia is advancing its CPO initiatives, targeting enterprise-grade AI applications.
TDK’s spin photodetector is a game-changer for generative AI and next-gen optical links.

These developments highlight the growing convergence between semiconductor and photonic technologies, setting the stage for faster, smarter, and more efficient data infrastructure

Conclusion

The optical interconnect market is undergoing a fundamental shift as the demand for faster, more efficient data transmission rises. With copper solutions reaching their performance thresholds, optical technologies are becoming the backbone of modern computing and networking systems.

Backed by cloud computing, AI/ML, and 5G rollouts, the market is set to double by 2030, making it a critical space for innovation. Companies that successfully integrate optical and silicon technologies will lead the evolution of ultra-high-speed, scalable network architectures.

About DataM Intelligence

DataM Intelligence 4Market Research delivers high-quality market research and advisory services across emerging technology sectors, including photonics, semiconductors, and telecom infrastructure. Our in-depth analysis and expert insights empower organizations to drive innovation and strategic growth.