Recently, LightCounting, a market research organization in the optical communication industry, pointed out in its latest report that the two vertical fields of the optical module market, telecommunications and data communication, both showed positive year-on-year growth in Q4 2024.

Despite the flat performance throughout the year, North American operators' spending growth in the fourth quarter drove the telecommunications market to a strong end. Although some rebounds are seasonal, several equipment and component suppliers pointed out that telecommunications demand showed signs of continued recovery. The data communication market continued to set new highs year-on-year, but the quarter-on-quarter growth rate slowed as expected.

Some of the reasons are as follows:

5G network construction and upgrade: Although 5G deployment is basically complete, the optimization and expansion of 5G networks are still continuing, and there is still a certain demand for optical modules in scenarios such as fronthaul, midhaul and backhaul. In addition, the development of emerging applications such as 5G network slicing and edge computing will also drive the demand for high-speed optical modules.

Computing network construction: Telecom operators are actively developing emerging businesses such as cloud computing, big data, the Internet of Things, and data centers, and gradually tilting capital expenditures to computing network scenarios such as cloud computing. The interconnection between data centers, the transmission and sharing of computing power, etc., all require a large number of optical modules to achieve high-speed and large-capacity data transmission.

Expansion and upgrade of fiber-to-the-home: With the popularization of broadband services and the growing demand for high bandwidth from users, the scale of fiber-to-the-home continues to expand, and the rate is upgraded to 10G PON, which will directly drive the demand for optical modules in the access network field.

Trunk transmission upgrade: With the explosive growth of data traffic, the trunk transmission network needs to be continuously upgraded to meet the needs of large-capacity and long-distance transmission. Optical modules with higher rates, such as 400G and 800G, will be more widely used in trunk transmission.

LightCounting pointed out that the current report is based on publicly released financial data and its market survey of optical module suppliers. Since some Chinese manufacturers have not yet disclosed their fourth-quarter financial reports or submitted research data, the report contains some estimated values. The final data on optical module sales in 2024 will be released in late April.

In addition, LightCounting data also shows that sales of 400ZR/ZR +, 400G Ethernet optical modules and active optical cables in the second half of 2024 exceeded expectations, demand for 25G/100G/200G products also increased due to the expansion of customer base, and even 1GbE and 10GbE products rebounded after experiencing multiple quarters of decline. All of these have provided strong support for the growth of the telecommunications optical module market.