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Optical Communication Systems and Networking Market Size, Share & COVID-19 Impact Analysis, By Component (Optical Fiber, Optical Transceivers, Optical Amplifiers, Optical Switches, Optical Circulators, Optical Sensors, and Others), By Technology (WDM, SONET, Fiber Channel, and Others), By Vertical (IT & Telecom, BFSI, Aerospace & Defense, Healthcare, Energy & Utilities, and Others), By Data Rate (Up to 40 GBPS, Greater than 40 GBPS to 100 GBPS, and Greater than 100 GBPS) and Regional Forecasts, 2022-2029

Region : Global | Format: PDF | Report ID: FBI106620

 

KEY MARKET INSIGHTS

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The global optical communication systems and networking market size was valued at USD 19.26 billion in 2021. The market is projected to grow from USD 20.39 billion in 2022 to USD 32.94 billion by 2029, exhibiting a CAGR of 7.09% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with optical communication systems and networking systems experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global optical communication systems and networking market share had exhibited a decline of 4.76% in 2020 as compared to 2019.

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Optical communication systems and networking are communication systems that use light signals instead of electronic ones to send information between two or more points. The points could be computers in offices, large urban centers or even nations in the global telecommunications system. Modern-day communication relies on optical networking systems using optical fiber, optical amplifiers, lasers, switches, routers, and other related technologies. It works using an optical transmitter device to convert an electrical signal received from a network node into light pulses, which are then placed on a fiber optic cable to transport to a receiving device.


These optical systems are used for various applications, including medical, defense, and data storage, and telecommunications, industrial and commercial devices. The high demand for these networking systems for military communication devices is increasing demand these systems. Moreover, optical communication system and networking are increasingly used in portable electronic devices for cellular signals and high-speed internet. As the demand for these portable devices rises, the global optical communication systems and the networking market are expected to witness significant CAGR during the forecast period.


COVID-19 Impact


Adoption of Optical Fiber to Cater the Sudden Increase in Demand Of Internet Bandwidth Amid COVID-19 Pandemic


The key players involved in designing and developing optical communication systems and networking and data center devices witnessed a moderate pandemic for various end-use industries such as commercial, industrial, defense, medical, aviation, space, and others. Among these, the commercial sector witnessed an increase in demand for optical fiber and a sudden rise in demand for high-speed internet bandwidth in 2020-2021 to provide high-speed fiber internet connectivity to ensure remote work. The COVID-19 outbreak has changed the current scenario more unpredictable than ever before. Remote working or working from home may become a preferable custom if the global workforce, working remotely, reports remarkably higher productivity during the lockdown. Consequently, the pandemic has led to high bandwidth demands in forthcoming years.


The government of developed and developing economies is investing more in R&D for optical fiber internet projects. Moreover, the private sector involved in the market should focus on this technology and its application. For instance,



  • In January 2022, Amplex announced that they are expanding high-speed optical fiber internet services to rural areas to meet growing needs for connectivity. The pandemic highlighted the need for reliable internet access from students to people working from home; Amplex says its expansion will help close the gap.


LATEST TRENDS


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Adoption of Artificial Intelligence (AI) to Boost Optical Communication Systems and Networking Market Growth


Artificial intelligence (AI) is a broad field of science and technology that permits high-speed computers to solve problems by simulating complicated biological processes like learning, reasoning, and self-correction. Improvisation of the performance of telecommunication networks by applying AI-based techniques has become an area of research in Optical communication and networking. Systems have not stayed on the sidelines they have started to adopt this discipline towards AI-based optical networking, from photonic devices to control and management. Moreover, for the adoption of AI in optical communication convolutional neural networks (CNNs), recurrent neural networks (RNNs), generative adversarial networks (GANs), cloud computing, deep reinforcement learning (DRL), end-to-end learning based on auto encoders, and their variants have made significant contributions to fields such as network traffic data, routing, resource allocation, automatic configuration.  



  • In January 2022, Motilal Nehru National Institute of Technology (MNNIT) announced that they have partnered with telecom company ITI Limited to Conduct Research on 5G, IoT, IIoT, AI, MI, Robotics and optical communication systems.                          


Rising Adoption of Space-Division Multiplexing for Optical Fiber Communications is Prominent Market Trend


Space-division multiplexing is a method of multiplying the data-carrying capacity of optical fibers simultaneously and increasing efficiency through resource sharing. The SDM transmission systems range from parallel single-mode fibers with shared amplifier pump lasers to the full spatial integration of transceiver hardware, signal processing, and amplification around fiber with over 100 spatial channels; these channels comprise cores, each carrying multiple modes. The demand for Space-division multiplexing devices increases over time due to the surge of space missions carried out by countries like the U.S., India, China, and other developed and developing economies.


DRIVING FACTORS


The Increasing Demand for Optical Solutions in Telecom Industry to Boost Market Growth


Many telecommunications companies use optical communication systems and networking systems to transmit telephone signals, Internet communication, and cable television signals. Due to lower attenuation and interference, optical fiber has advantages over copper and has enabled wireless telecommunications links to be made over much greater distances. With much lower levels of loss in the transmission medium and possibly most important, fiber optical communication have enabled much higher data rates to be accommodated. As a result of these advantages, optical solutions in the telecom industry are widely employed for applications ranging from major telecommunications backbone infrastructure. Moreover, the increasing defense budget and rising demand for military communication equipment are anticipated to contribute a significant share in the market in forthcoming years. For instance, the global defense expenditure has recorded the highest ever hike in the decade. The major share was accounted for by prominent countries such as the U.S., followed by China, India, and Russia. In 2021, the U.S. defense budget reached USD 778 billion, 4.4% over 2019. As the world’s largest defense spender, the U.S. accounted for 39% of total defense expenditure in 2020.



  • In April 2021, the communication division of L3Harris Technologies Inc. announced that it received a contract from the U.S. Department of Defense to modernize its tactical communications capabilities.


Embracing 5G Network Services in Telecom Industry to Propel Market Growth


5G is used across three main applications, including enhanced mobile broadband, mission-critical communications, and the massive IoT. The 5th-generation (5G) wireless brings to optical networks new requirements such as high bandwidth, low latency, accurate synchronization and the ability to perform network slicing and autonomous operation. Moreover, the 5G services in optical communication networks support a wide range of valuable communication services, including residential, enterprise, and other commercial services. The adoption of 5G network services in the telecom industry high-speed internet connectivity will eventually lead to higher growth of optical telecommunication solutions in terms of revenue and market share.



  • In January 2022, HFCL Limited and Wireless Telecom Group agreed to install 5G new radio (NR) software in its 5G small indoor cells. HCFL uses CommAgility's flexible, configurable 5G NR physical layer (PHY) and Digital Front-End (DFE) software for deployment across various verticals such as consumer, enterprise, and industry.

  • In December 2021, Indiana-based telecommunications company MetroNet announced the investment of USD 50 million to bring high-speed fiber-optic internet to Palm Coast through 3 million linear feet of fiber. The company's high-speed internet offerings will help the city attract job-creating businesses, let residents connect more efficiently to services and upgrade connections


RESTRAINING FACTORS


Complex Design of Optical Networking Solutions to Hinder Market Growth


The complex design of these optical networking solutions has led to a high initial cost of setup and maintenance, which hinders the use of optical communication and networking systems globally. The market for optical networking solutions is being held back by the intensive computations and maintenance necessary for optical communication and networking systems. The system and installation costs change with fiber modes for optical networking solutions. For instance, single-mode optical fiber is often used for long distances, while multimode optical fiber is commonly used for short ranges. T high cost is complexity in installation and high demand of optical solutions as nothing to date can match the bandwidth and speed fiber optics offers in communications and data movement. Thus the above-stated factors are anticipated to hinder the market growth.


SEGMENTATION


By Component Analysis


Optical Fiber Segment Dominated the Market Share in 2021


The optical fiber segment dominated the market in 2021 due to its numerous advantages and capabilities. Optical fibers support extremely high bandwidth and speed with ample data transmitted per unit of optical fiber cable. Moreover, optical fiber is anticipated to be the growing segment due to the high demand for high-speed internet services all over the globe, and the optical fiber is the only solution to it.



  • In October 2021, NEC Corporation won a contract from Facebook to build a transatlantic subsea fiber-optic cable connecting the USA and Europe. International data usage across the Atlantic is expected to grow 20-fold in the 15 years between 2021 and 2035.


By Technology Analysis


WDM Segment is Projected to Grow at Higher CAGR during the Forecast Period 


The wavelength division multiplexing (WDM) segment projected higher growth rate in terms of revenue and market share due to the adoption of dense wavelength division multiplexing (DWDM). The DWDM is an optical multiplexing technology used to increase bandwidth over existing fiber networks. DWDM works by combining and transmitting multiple signals simultaneously at different wavelengths on the same fiber. The high bandwidth demands for space applications to boost the segment growth during the forecast period. Moreover, DWDM over coarse wavelength division multiplexing (CWDM) provides an uplift of existing CWDM networks to support more wavelengths at a higher bandwidth without changing the existing setup.


By Vertical Analysis


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IT & Telecom Segment to hold Dominant Share during the Projected Timeframe


The IT & Telecomm segment witnessed substantial growth in the base year due to the growing demand for high-speed connectivity and data transfer. Moreover, the increasing demand for cellular and internet connections adds a major share in segment growth in the near future. The Aerospace & Defense segment is anticipated to be the emerging segment due to increased defense expenditure and high speed optical communication systems in radios and other communication devices in the industrial vertical For Instance,



  • In December 2021, The U.S. Navy’s Navy Exchange Service Command (NEXCOM) had awarded Viasat two new contracts to support personal communications at navy bases in Guam and Poland.


The company deploys a new optical fiber network backbone to support naval station Guam and Andersen air force base.


By Data Rate Analysis


Greater than 100 GBPS Segment to Witness High Pace Growth During 2022-2029


The greater than 100 GBPS segment will witness substantial growth during the forecast period due to rising demand for 5G network services by several end-use verticals. The 5G technology uses radio waves to send and receive data, while fiber-optic communication uses light to transmit data through fiber optic cables. Whereas 5G can have a downlink speed up to 20 GBPS and 10 GBPS uplink, the practical speed measured on Fiber cables is 100 GBPS.



  • In December 2021, Telekom Malaysia Bhd (TM) announced the signing of a Fibre Leasing Service agreement with Digital Nasional Bhd (DNB) to speed up the deployment of the Government-owned 5G network nationwide.


REGIONAL INSIGHTS


Asia Pacific Optical Communication Systems and Networking Market Size, 2021 (USD Billion)

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Asia Pacific stood at revenue share of USD 6.91 billion in 2021. The Asia Pacific dominated the market in the base year and is anticipated to remain dominant throughout the forecast period. The presence of several OEMs in China, Japan, India, South Korea, and Australia are expected to surge the market growth during 2022-2029. In addition, the growing smart city projects with high speed internet requirements and developing telecommunication, aviation, defense, healthcare, and semiconductor industries in the mentioned countries to support the market growth during the forecast period.


North America held the second-highest share in the base year. The rise in adoption of advanced optical technology such as quantum optics in defense, aviation, the industrial and commercial industry is anticipated to fuel the market growth in North America. In addition, large defense spending and the presence of several key players in the U.S. are supporting expanding the market growth in North America.


The market in Europe is projected to grow moderately during the forecast period. The growing aerospace, healthcare, automotive, and manufacturing industries in the U.K., Germany and France are expected to drive the market growth in Europe. There’s a clear and urgent need to invest in developing new technologies to recover the global leadership for Europe's aviation industry.


The Rest of the World has witnessed sluggish growth amid pandemics due to disruption in supply chain management. However, an increase in the adoption of photonics solutions to develop modern infrastructure in Saudi Arabia and the UAE will create lucrative growth opportunities in the market in the upcoming years. The rising investment in aviation and defense activities in UAE and other neighboring countries is anticipated to create lucrative growth opportunities in the forthcoming future.


KEY INDUSTRY PLAYERS


 Key Players Emphasize Technological Collaborations to Gain a Leading Edge in the Market


The competitive landscape of optical communication systems and networking market depicts the domination of selected players such as Arista Networks, Ciena Corporation, and Cisco Systems, Inc. The constant investment in R&D activities, a large focus on product innovation, and long-term contracts with government and authorized bodies will support these companies to withstand their market position. For instance, In January 2022, ADTRAN and ADVA combined the two major companies to create a leading global, scaled provider of end-to-end fiber networking solutions for communications service providers, enterprise, and government customers. Moreover, companies mapped in this report are expanding their geographic reach in the Asia Pacific in forthcoming years.


LIST OF KEY COMPANIES PROFILED:



  • ADTRAN, Inc.(U.S.)

  • ADVA Optical Networking (Germany)

  • Arista Networks (U.S.)

  • Broadcom Inc. (U.S.)

  • Ciena Corporation (U.S.)

  • Cisco Systems, Inc. (U.S.)

  • Corning Incorporated (U.S.) 

  • FiberHome (China)

  • Finisar Corporation (U.S.)

  • Fujitsu Limited (Japan)

  • Huawei Technologies Co., Ltd (China)

  • Infinera Corporation (U.S.)

  • Juniper Networks, Inc. (U.S.)

  • Lumentum Operations (U.S.)

  • Mitsubishi Electric (Japan)

  • NEC Corporation (Japan)

  • Nokia (Finland)

  • Sumitomo Electric (Japan)

  • Telefonaktiebolaget LM Ericsson (Sweden)  


KEY INDUSTRY DEVELOPMENTS:



  • December 2021 – Ericsson and King Abdullah University of Science & Technology (KAUST) entered a research and development (R&D) partnership in Saudi Arabia for three years. The research program will focus on the next generations of 5G and 6G, including machine learning for frequency-selective wireless channels, Terahertz and free-space optical communications and transparent and flexible intelligent surfaces.

  • December 2021 – The U.S. Defense Advanced Research Projects Agency (DARPA) issued a contract to space-based laser communication technology company Mynaric to design a new optical communications terminal under phase zero of the Space-Based Adaptive Communications Node (Space-BACN) program.


REPORT COVERAGE


An Infographic Representation of Optical Communication Systems and Networking Market

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The market research report provides a detailed market analysis and focuses on key aspects, such as renowned manufacturers, products, demanding technologies, and end-users. Moreover, it offers insights into the optical communication systems and networking trends and highlights key industry developments. In addition to the factors mentioned above, the market report encompasses several direct and indirect factors that have contributed to the market's growth over recent years.


Report Scope & Segmentation























































  ATTRIBUTE



  DETAILS



Study Period



2018-2029



Base Year



2021



Estimated Year



2022



Forecast Period



2022-2029



Historical Period



2018-2020



Unit



Value (USD Billion)



Segmentation



Component, Technology, Vertical, Data Rate, and Geography



By Component



  • Optical Fiber

  • Optical Transceivers

  • Optical Amplifiers

  • Optical Switches

  • Optical Circulators

  • Optical Sensors

  • Others



By Technology



  • WDM

  • SONET

  • Fiber Channel

  • Others



By Vertical



  • IT & Telecom

  • BFSI

  • Aerospace & Defense

  • Healthcare

  • Energy & Utilities

  • Others



 



By Data Rate



  • Up to 40 GBPS

  • Greater than 40 GBPS to 100 GBPS

  • Greater than 100 GBPS



By Geography


 




  • North America (By Component, Technology, Vertical, Data Rate, and Country)

    • U.S. (By Vertical)

    • Canada (By Vertical)



  • Europe (By Component, Technology, Vertical, Data Rate, and Country)

    • U.K. (By Vertical)

    • Germany (By Vertical)

    • France (By Vertical)

    • Russia (By Vertical)

    • Rest of Europe (By Vertical)



  • Asia Pacific (By Component, Technology, Vertical, Data Rate, and Country)

    • China (By Vertical)

    • India (By Vertical)

    • Japan (By Vertical)

    • Rest of Asia Pacific (By Vertical)



  • Rest of the World (By Component, Technology, Vertical, Data Rate, and Country)

    • Latin America (By Vertical)

    • The Middle East & Africa (By Vertical)





Frequently Asked Questions

Fortune Business Insights says that the global market size was USD 19.26 billion in 2021 and is projected to reach USD 32.94 billion by 2029.

Registering a CAGR of 7.09%, the market will exhibit steady growth in the forecast period (2022-2029).

Cisco Systems, Inc., Ciena Corporation, and Huawei Technologies Co., Ltd. are the leading players in the global market

Asia Pacific dominated the market in terms of share in 2021.

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