The explosive growth of artificial intelligence (AI) technology is reshaping the underlying logic of the global digital infrastructure. As the core transmission carrier of data centers and communication networks, the optical transceiver industry is standing in the “eye of the storm” of the AI computing revolution. From the rate iteration of 800G to 1.6T, from the technological leap from traditional pluggable to CPO (co-packaged optics), optical transceivers are not only the “highways” of data transmission, but also the “blood transfusion channels” for AI large model training and reasoning. This article will deeply analyze the technological evolution, market demand and competitive landscape of the optical transceiver industry in the AI era, and look forward to its future development prospects.
AI Computing Power Demand: The Underlying Logic Driving the Iteration of Optical Transceiver Technology
Exponential Demand for Bandwidth in Large-Model Training
The parameter count of individual AI large models has surpassed the trillion level (e.g., GPT-4), and the computing power required for training doubles every 3-4 months, far outpacing Moore’s Law. This directly drives the upgrade of optical interconnection bandwidth within data centers from 100G to 800G/1.6T. Taking NVIDIA’s DGX H100 server cluster as an example, its internal interconnection requires a total bandwidth of at least 4.8 Tbps, with the demand for optical transceivers per single cabinet exceeding 500 units.
Technical Challenges of Low Latency and High Energy Efficiency
AI computing has extremely low tolerance for data transmission latency (requiring less than 100 nanoseconds), while the power consumption of traditional pluggable optical transceivers already accounts for over 30% of the total energy consumption of data centers. CPO technology, by directly packaging the optical engine with the ASIC chip, can reduce power consumption by 40% and latency by 50%, becoming the next technological high ground. According to LightCounting’s forecast, the CPO market size will exceed $5 billion by 2027.
Commercial Breakthroughs in Silicon Photonics Technology
Silicon photonics technology integrates lasers, modulators, and detectors through CMOS processes, significantly reducing the cost and size of optical transceivers. Companies like Intel and Cisco have already launched silicon photonics 400G transceivers, and domestic manufacturers are also accelerating mass production. Yole predicts that the market share of silicon photonics modules will increase from 20% in 2023 to over 60% by 2030.
Market Landscape: Global Supply Chain Restructuring and Domestic Opportunities
“Arms Race” Among North American Cloud Providers
Tech giants such as Meta, Microsoft, and Google plan to increase the penetration rate of optical transceivers in AI data centers to 80% by 2024-2025. Taking Microsoft Azure as an example, its planned deployment of 1.6T optical transceivers will reach 2 million units by 2025, with a market size exceeding $3 billion. North American cloud providers are deeply binding with leading Chinese enterprises through the JDM (Joint Design Manufacturing) model.
Technological Breakthroughs by Chinese Manufacturers
With cost advantages and rapid iteration capabilities, Chinese optical transceiver enterprises have captured over 60% of the global market share. According to Omdia data, Chinese enterprises accounted for over 70% of the 800G market share in 2023.
Supply Chain Resilience Amid Geopolitical Tensions
U.S. semiconductor export controls on China have compelled domestic industry chain vertical integration. From optical chips, packaging materials to testing equipment, the domestic substitution rate has increased to over 50%. Meanwhile, leading companies have evaded tariff risks through overseas bases in Thailand and Malaysia, forming a global production capacity network of “Chinese design + Southeast Asian manufacturing”.
Future Trends: From Technological Evolution to Ecosystem Competition
The Rise of LPO (Linear Direct Drive) Technology
Compared with CPO, the LPO solution eliminates the need for DSP chips, reducing power consumption by 20% and cost by 30%, becoming an alternative for medium- and short-distance transmission.
Optoelectronic Integration and Intelligent Operation and Maintenance
Optical transceivers are evolving towards intelligence, integrating functions such as temperature sensing, power consumption monitoring, and failure prediction. The concept of “autonomous driving networks” proposes dynamically optimizing the working state of optical transceivers through AI algorithms, improving data center energy efficiency by 15%.
Standards Competition and Ecosystem Positioning
Industry alliances have become new battlefields for competition. International organizations such as COBO (Co-Packaged Optics Alliance) lead the formulation of CPO standards, while the China Academy of Information and Communications Technology (CAICT) has taken the lead in establishing the “Optoelectronic Integration Technology Committee” to promote the implementation of domestic standards. In the next five years, whoever holds the discursive power in technological standards will dominate the trillion-dollar AI computing power market.
Challenges and Risks
Uncertainty in Technological Iteration
The parallel development of multiple technological routes such as CPO, LPO, and silicon photonics may lead to risks of redundant investment. For example, if the heat dissipation and yield issues of CPO cannot be overcome, it may trigger industrial turbulence due to a shift in technological routes.
The “Bullwhip Effect” in the Supply Chain
Fluctuations in AI computing power demand may lead to inventory backlogs of optical transceivers. In Q4 2023, order cancellations by North American cloud providers caused some enterprises’ inventory turnover days to soar to over 120 days, exposing the fragility of demand forecasting.
The “Gray Rhino” of Geopolitics
The United States may include optical transceivers in the export control list or even restrict the supply of advanced optical chips to China. If domestic 25G and above DFB lasers cannot make breakthroughs, it will hinder the development of high-end products.
Conclusion
Under the dual revolutions of AI and computing power, the optical transceiver industry has evolved from a “supporting role” in the communications field to a strategic infrastructure for the digital economy. In the short term, the mass production of 800G and the R&D of 1.6T will spawn a new round of growth cycles; in the long term, optoelectronic integration and standards competition will define the industry’s final outcome. For Chinese enterprises, only by achieving a balance between technological innovation, supply chain resilience, and adaptation to international rules can they remain invincible in this global competition and cooperation. The future optical transceiver industry is not just a technological contest but a comprehensive game of ecosystems and strategies.