Product Code: 67025
The Optical Modulators Market was valued at USD 29.06 billion in 2020, and it is expected to register a CAGR of 6.83%, during the period of 2021-2026. An electro-optic modulator plays a very crucial role in the fiber optic networks. Just as a transistor acts as a switch for the electronic signals, an electro-optic modulator act as a switch for the optical signals. Optical communication primarily uses light, so the modulator's function is to turn on and off the light that is sending a stream of binary signals over optical fibers.
- Today's long and medium-range communication networks primarily rely on the optical fiber links, where encoding the electrical signals into a near-infrared modulated light is an essential function that was traditionally realized by the discrete electro-optical modulators. The rapidly rising trend of carrying information over much shorter distances combined with the foreseen microelectronics copper interconnect bottleneck has pushed the researchers to move toward silicon as an alternative photonic material.
- This is owing to its capacity to meet the rapidly increasing demand for higher bandwidth technologies, via energy-efficient, ultra-fast, small footprint optical networks-on-chip, and cost-effectiveness. This resulted in the combination of the complementary-metal-oxide-semiconductor compatible materials such as germanium and very recently the inclusion of graphene with the silicon enabled high bandwidth electro-absorption modulators.
- Optical networking and communication are evolving at a rapid pace, evidenced by the robust growth witnessed across the revenues of leading vendors in the market. Companies are investing heavily in the development of advanced models of optical modulators and networks, which can facilitate higher data transfer in a generation where speed is of utmost importance.
- With the rapidly growing demand for data storage and network traffic, data center providers are increasingly looking to shift toward higher storage capacities. Thus, the demand for hyperscale data centers is expected to further increase over the forecast period. According to Credit Suisse, revenue from global hyperscale data centers is expected to reach USD 800 billion by 2020.
- The rapid surge in data transmission by the high-performance servers, computers, and network storage systems has also generated a strong demand for the optical fibers to guarantee seamless and accelerated data flow. Factors, such as the rapid growth of internet traffic globally, the transition to FTTH, growth in the number of smart cities, the increasing implementation of the Internet of Things (IoT), the advent of autonomous cars, increase in data center traffic across networks, the optical switch fabrics for communications, are thereby, fueling the demand for optical modulators.
- The world's largest investors focus on the digital infrastructure market, citing extraordinary demand for capital to boost the data economy. Investor interest remains high even amid the COVID- 19 pandemic. The growth of hyperscale computing has boosted investor interest in data centers globally. As the demand for modern, flexible, and scalable data center grows, investment in data centers would create opportunities for the adoption of modular data centers.
Key Market Trends
Optical Communication Drive the Optical Modulators Market
- Today's soaring demand for increasing the data transmission rate motivates a great challenge to improve the spectral efficiency of fiber-optical channels. To achieve higher spectral efficiency, exploiting an advanced coded modulation scheme is inevitable. This, coupled with advances in the telecommunication industry, has increased the adoption of optical modulators in Optical Communication. Optical fibers, conceived for fast communication on long distances, are also developing in manifold other industrial and commercial sectors, widening the applicative potentialities of photonic technologies.
- Further, with the advent of optical fiber networks globally, the size, performance and power consumption of the lithium niobate modulators are becoming a crucial factor to be considered for telecoms operators, especially when the data centers and base stations are being forecast to be among the largest electricity users across the telecoms industry.
- The widespread use of optical fibers in communications is boosted by the growing demand for higher performance and speed, forecast a bright future for the optical technology, also because optical fibers are the base for applications in several other applicative contexts. According to Wire Tech World, with 3 billion dollars in 2016, in 2021, the global market of cables, fiber sensors and connectors will reach about 5 billion, with an expectation of 9 billion within 2025, communications sector, ambits where optical fibers are then proposed for highly diversified applications.
- To support the requirement for faster data rates, superior switching techniques, and more intelligent network architectures that can automatically adjust dynamically in response to traffic patterns and, at the same time, be cost-effective, optical modulators can play a substantial role. The trend is anticipated to continue in the future as breakthroughs already attained in the laboratory will be extended to practical deployment, thereby leading to a new generation in fiber optics communications.
North America is Expected to Hold a Major Share
- The roll-out of 5G commercial services globally is expected to commence during 2019 - 2020. The market is expected to witness growth by supporting the accelerated build-out of 5G in the United States. Moreover, according to Ericsson, by the end of 2025, the 5G mobile subscription is expected to reach 318 million, which is more than 80% penetration of all the mobile subscriptions in the North America region, which would further fuel the demand for 5G infrastructure.
- Unlocking the full potential of 5G in the United States majorly depends on the extension of fiber deep into the network. However, despite the demand and potential economic benefits of fiber deployment, the United States currently lacks the fiber density in access networks to make the bandwidth advancements necessary to improve the pace of innovation and economic growth.
- Cloud-based enterprise applications are thriving in the North American region. The cloud-based solutions depend on internet connectivity to function in the hosted environment, with 5G enabling much faster internet speed, it will further enhance the connectivity experience.
- The North American region also has the highest monthly mobile data traffic per smartphone, which reached 7.2 gigabytes (GB) by the end of 2017. This data traffic is anticipated to rise to 49 GB by the end of 2023, thereby driving the market during the forecast period.
- According to Telecom Advisory Services, in 2019, the United States generated 41.52 million exabytes per month of internet traffic. According to Cisco, the cloud traffic in North America will be 4,860 exabytes per year in 2019. About 10% of enterprise-generated data is created and processed outside a traditional centralized data center or cloud.
The Optical Modulator market is highly fragmented and consists of several major players. The leaders are focusing on innovation in technology and investment in research and development. Business strategies such as collaboration, joint ventures, and mergers and acquisitions have allowed OMM firms to stay competitive in the market. Many organizations believe in upgrading their current portfolio to attract their customers. Some of the recent developments in the market are:
- In Jan 2020, II-VI Incorporated, a player in laser optics and subsystems, announced the introduction of its electro-optic modulators based on proprietary crystal technology ultrafast lasers in materials processing. The ongoing efforts to increase the manufacturing sector efficiencies are spurring the demand for next-generation laser systems that can achieve faster materials processing throughput. The company's electro-optic modulators primarily enable ultrafast lasers to generate a series of highly controlled energy pulses at rapid intervals to achieve precision machining tasks such as scribing, drilling, and marking high speed.
- In July 2019 - Hamamatsu Photonics created a spatial light modulator that delivers the highest pulse laser power capability up to 400 GW/square cm, by utilizing its advanced thin-film and circuit designing technologies.
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TABLE OF CONTENTS
- 1.1 Study Assumptions and Market Definition
- 1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET INSIGHT
- 4.1 Market Overview
- 4.2 Industry Attractiveness - Porter's Five Force Analysis
- 4.2.1 Bargaining Power of Suppliers
- 4.2.2 Bargaining Power of Buyers/Consumers
- 4.2.3 Threat of New Entrants
- 4.2.4 Threat of Substitute Products
- 4.2.5 Intensity of Competitive Rivalry
- 4.3 Assessment of Impact of COVID-19 on the Optical Modulators Market
5 MARKET DYNAMICS
- 5.1 Market Drivers
- 5.1.1 Increasing Investment in Optical Fiber Communication Infrastructure
- 5.2 Market Restraints
6 MARKET SEGMENTATION
- 6.1 By Type
- 6.1.1 Amplitude Modulators
- 6.1.2 Polarization Modulators
- 6.1.3 Phase Modulators
- 6.1.4 Analog Modulators
- 6.1.5 Other Types
- 6.2 By Application
- 6.2.1 Optical Communication
- 6.2.2 Fibre Optic Sensors
- 6.2.3 Space & Defense
- 6.2.4 Industrial Systems
- 6.3 Geography
- 6.3.1 North America
- 6.3.2 Europe
- 6.3.3 Asia Pacific
- 6.3.4 Rest of the World
7 COMPETITIVE LANDSCAPE
- 7.1 Company Profiles
- 7.1.1 Thorlabs Inc.
- 7.1.2 Lumentum Holdings Inc.
- 7.1.3 AA Opto-Electronic
- 7.1.4 Fujitsu Optical Components Limited
- 7.1.5 Gooch & Housego Plc.
- 7.1.6 Lightwave Logic
- 7.1.7 Hamamatsu Photonics K.K.
- 7.1.8 APE GmbH
- 7.1.9 Versawave Technologies Inc.
- 7.1.10 L3Harris Technologies Inc.
- 7.1.11 AMS Technologies AG
8 INVESTMENT ANALYSIS
9 FUTURE OF THE MARKET