Optical Transceiver Market Is Projected To Reach US$36.73 Billion By 2031, Registering a CAGR Of 14.2% | The Insight Partners

NEW YORK, Sept. 26, 2025 /PRNewswire/ -- A new in-depth optical transceiver market report by The Insight Partners highlights robust market growth, driven by rising data traffic, increasing bandwidth demand, surging migration to cloud-based services, and the growing need for high-speed connectivity. The comprehensive analysis dives deep into market size, emerging trends, profiles key industry players, and uncovers strategic opportunities shaping the industry landscape. With a spotlight on key market segments and applications, the optical transceiver market report highlights the factors set to drive market momentum in the years ahead.

Engineered for Growth: Optical Transceiver on Rapid Ascent

Optical transceiver market growth is attributed to the compact and energy-efficient transceivers. The market is valued at US$14.60 billion in 2024 and projected to reach US$36.73 billion by 2031, registering a CAGR of 14.2% during 2025–2031. This growth is driven by increasing 5G network rollout, rising data traffic & cloud adoption, and growing investments in data centers.

Increasing Need For High-Speed Connections Set to Shape Industry Outlook

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Advanced optical transceiver technologies—such as coherent detection, silicon photonics integration, and high-speed modulation techniques—enable the production of ultra-fast, energy-efficient, and compact communication modules critical for modern data centers, telecommunications, and 5G networks.

Future market opportunities lie in continuous improvements in data transmission rates, greater adoption of photonic integrated circuits (PICs), and expanding demand for high-capacity, low-latency networks, positioning optical transceivers as a fundamental enabler of next-generation connectivity and digital infrastructure innovation

Increasing 5G Network Rollout Boosts Optical Transceiver Demand

The global rollout of 5G networks is reshaping telecom infrastructure worldwide. According to the GSM Association (GSMA), 5G connections hit ~1.6 billion by the end of 2023 and are expected to grow to 5.5 billion by 2030, with the majority of the markets in the US, China, South Korea, and parts of Europe leading the expansion. According to the State Council of China, the country had 851 million 5G mobile subscribers as of February 2024.

Top telecom operators such as Verizon, China Mobile, and Vodafone are making major investments to expand 5G coverage, driven by growing consumer demand for faster, low-latency connectivity. Data from SellCell also shows there were ~951 million 5G users globally in 2022, with projections for 2023 showing a 50% jump to 1.48 billion users.

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The table below shows the increase in worldwide 5G subscribers:

     Number of 5G Subscriptions Worldwide from 2019 to 2025

 Source: SellCell.com

This surge is driven by enhanced mobile broadband, massive IoT deployments, and ultra-reliable low-latency communications, which require robust, high-capacity network backbones to function effectively. The deployment of 5G technology creates significant demand for optical transceivers, as these devices form the critical interface for high-speed data transmission across fiber-optic networks.

Rising Investments in Data Centers Drive Optical Transceiver Market Growth

The world's data generation and consumption are increasing exponentially owing to big data analytics, artificial intelligence, cloud computing, and the internet of things (IoT). This requires more data centers to store, process, and distribute this data, leading to rising investment in data centers. Businesses are increasingly investing in building and expanding their data center infrastructure to meet the growing demands for data storage, processing, and management. For instance:

• In January 2025, a joint venture among OpenAI, Softbank, and Oracle planned to invest US$100 billion in artificial intelligence infrastructure, with the potential to scale up to US$500 billion. This investment includes constructing 10 data centers, including one already under construction in Abilene, Texas. Each facility will span ~500,000 square feet.
• In February 2025, Blackstone Group and its development partner Panchshil Realty planned to develop India's single largest hyperscale data center with 500 MW capacity in Navi Mumbai with an investment of over US$2.3 billion (~₹ 20,000 crore). The 500 MW facility will cover 3 million sq ft across 14 buildings and use up to 65% renewable energy.
• In March 2025, L&T Cloudfiniti, the data center business of the wider L&T conglomerate, announced its plans to invest ~US$415 million (~₹ 3,600 crores) in India to build three new data centers.

Data centers require optical transceivers to connect server racks, switches, and storage over fiber. Thus, as an investment in data centers continues to grow, the demand for optical transceivers is also expected to rise.

Geographical Insights

According to the optical transceiver market analysis, North America led the market in 2024, accounting for the highest revenue share owing to the expanding data centers, increasing investment in 5G infrastructure, and demand for cloud computing. According to the 2024 CBRE North America Data Center Trend Analysis, North America's seven leading data center markets are Northern Virginia, Dallas/Fort Worth, Silicon Valley, Chicago, Phoenix, the New York Tri-State Area, and Atlanta. The rollout of 5G networks is accelerating the region's need for high-speed optical transceivers. North America leads in 5G adoption, and accounted for 29% of the total connections within North America by the end of 2023. Notably, the area had a 64% year-over-year increase in 5G connections, adding 77 million to its network. By the end of 2023, North America had 197 million 5G connections. Optical transceivers are crucial for 5G networks, enabling high-speed, low-latency data transmission in various network architectures, including fronthaul, midhaul, and backhaul.

The optical transceiver market forecast indicates that Asia Pacific is set to register the highest CAGR in the coming years, owing to rapid development in 5G rollouts across major economies such as China, Japan, South Korea, and India. According to Speedflow Communications Ltd, China, South Korea, and Japan account for more than 60% of global 5G connections, with China alone having over 1.2 billion 5G users in 2024. According to the GSMA, Asia Pacific will have over 1.4 billion 5G connections by 2025. The GSMA Intelligence report highlights that 5G is expected to contribute US$212 billion to the economy of Asia Pacific by 2025. Such rapid 5G development is expected to significantly boost the demand for optical transceivers in the region over the coming years.

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Market Segmentation

• Based on form factor, the optical transceiver market is segmented into SFP series, QSFP series, and CFP series. Among these, the SFP series segment held the largest share in 2024. The small form-factor pluggable (SFP) series remains prominent in the optical transceiver market due to its compact size, cost-efficiency, and adaptability across various network environments.
• In terms of wavelength, the optical transceiver market is divided into 1310 nm band, 850 nm band, 1550 nm band, and others. The 1310 nm band segment captured the largest optical transceiver market share in 2024. The 1310 nm band is one of the most widely used wavelengths in optical transceivers, especially for medium-distance data transmission. It is commonly used in data centers, metro networks, and enterprise environments where signals need to travel up to around 10–40 kilometers.
• By data rate, the optical transceiver market is segmented into 10 Gbps to 40 Gbps, 41 Gbps to 100 Gbps, more than 100 Gbps, and less than 10 Gbps. The 10 Gbps to 40 Gbps dominated the market in 2024. The 10 Gbps to 40 Gbps data rate segment is one of the most widely used ranges in the optical transceiver market. These transceivers are often found in enterprise networks, metro ethernet, and small to mid-sized data centers.
• The optical transceiver market trends are studied in the following end-use segments: data centers, telecommunications, and enterprise networking. The data centers segment captured the largest optical transceiver market share in 2024. Data centers are one of the largest users of optical transceivers, as they need to transmit large amounts of data quickly and efficiently. These facilities house thousands of servers that must communicate with each other through high-speed connections.

Competitive Landscape and Major Developments

• Key Players: A few major companies operating in the market are Coherent Corp, Lumentum Holdings Inc, Broadcom Inc, Sumitomo Electric Industries Ltd, Cisco Systems Inc, Intel Corp, Amphenol Corporation, Accelink Technology Co Ltd, NEC Corp, and Samtec Inc.
• Trending Topics: 5G Optical Transceiver, QSFP Optical Transceiver, Single-Mode Optical Transceiver, and Data Center Optical Transceiver, among others.
• Global Headlines on Optical Transceiver
  • Coherent Corp announced the shipment of its 300-millionth optical transceiver from its manufacturing facility in Ipoh, Malaysia. This milestone underscores the scale, resiliency, and flexibility of coherent supply chain solutions for customers.
  • Lumentum Holdings Inc. announced limited sampling of its new 400/800G ZR+ L-band pluggable transceivers and general availability of its 800G ZR+ C-band module. Both products will be showcased in live demonstrations at the 2025 Optical Fiber Communications Conference and Exhibition (OFC) at Lumentum Booth #2119 in San Francisco, California.

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Conclusion

Growing demand for high-speed internet, cloud computing, and data center expansion drives the optical transceiver market. Increasing adoption of 5G networks and IoT devices fuels the need for faster and reliable data transmission.

With more suppliers entering the optical transceiver market, buyers benefit from increased flexibility, competitive pricing, and enhanced supply chain responsiveness. This broader supplier base has boosted buyers' bargaining power, enabling better deal negotiations and access to diverse product specifications aligned with evolving network requirements, projected to continue by 2031.

The market is experiencing intense competitive pressure. Numerous forging providers across regions compete for market share through superior product quality, advanced material capabilities, aggressive pricing, and faster delivery timelines.

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