LightCounting: By 2030, the AI optical interconnect market is expected to reach USD 100 billion?

C114 News, April 2 - Recently, LightCounting, a market research organization for optical communications, stated in its latest report that by 2030, the annual sales of optical interconnect products used in AI clusters are expected to reach $100 billion. However, achieving this goal requires "the right time, the right place, and the right people," with many factors needing to align perfectly. In 2024, sales of Ethernet optical modules doubled, and in 2025, they grew by another 70%, far exceeding expectations. InP laser suppliers expanded their production capacity last year to meet the growing demand, and the shortage of these devices, as well as many others used in optical module manufacturing, is currently easing. By 2026, the production capacity of optical modules will be sufficient to support a doubling of sales, but this will exceed actual customer demand. The shortage of XPU (various accelerators) and switch ASIC chips will limit the expansion of AI clusters in 2026, and unless customers build up significant inventory reserves, the sales growth of optical modules in 2026 will be limited to "only" around 60%. There is more uncertainty regarding market growth from 2027 to 2031. As shown in the figure, "Fantastic Growth" may continue in 2027 and beyond. However, historical data on optical module sales from 2004 to 2025 shows a cyclical pattern: a growth period of 2-3 years is typically followed by a flat or negative growth year. LightCounting indicates that most cycles are caused by supply chain rebalancing, and a similar situation may be seen in 2027-2028. LightCounting's forecast leans towards a "soft landing," but supply chain balance is often achieved through market corrections, leading to a "Bumpy Ride" scenario. There are several favorable factors for optical interconnects in AI clusters. Larger clusters will require more optical modules per GPU; for example, in Scale-out networks, each GPU may need up to 6 optical modules. In Scale-up networks, the required bandwidth is nearly 10 times that of Scale-out networks, opening up another market segment for suppliers. However, compared to historical data, the "Fantastic Growth" scenario appears unrealistic. LightCounting suggests that some may argue that the AI boom changes everything and that market history can be completely ignored. However, the four major cloud providers (Amazon, Google, Meta, and Microsoft), which currently consume over 50% of the entire AI optical module market, also accounted for over 40% of Ethernet optical module sales from 2018 to 2023. History may not repeat itself, but there are similarities The table below summarizes the key factors that may affect the market from 2026 to 2031, as well as the extent of change required for the market to move towards one of these two growth scenarios. To achieve the "high growth" scenario, "many conditions must be just right at the same time," but even one factor could push the market towards the "volatile" scenario. LightCounting introduces that this report analyzes the impact of data traffic growth and data center architecture changes on the Ethernet optical module market forecast, focusing on high-speed modules for AI clusters. The report combines detailed historical data on Ethernet module shipments with extensive market research to predict the sales of these products from 2026 to 2031. The forecast covers over 100 product categories, including 100GbE, 200GbE, 400G, 800G, 1.6T, and 3.2T retimed optical modules, as well as LPO/LRO and CPO/NPO modules categorized by transmission distance and packaging form.