Summary

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.

Amid the covid-19 pandemic, the world’s largest investors are focusing on the digital infrastructure market, citing high demand for capital to boost the data economy. The growth of hyperscale computing has boosted the investment interest in data centers globally. Communications, servers, and many other electronic systems depend on high-speed serial transceivers and optical modulators, which are forming the backbone of networks and the Internet.

- 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.
- 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.

Key Market Trends

Optical Communication is Expected To Hold a Significant Market Growth

- 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 Contribute Towards Significant Market Share

- The increasing investment for 5G/LTE infrastructure by telecommunication companies is one of the significant factors driving the demand for optical modulators in the industry in the region. These companies are taking initiatives to accelerate the 5G/LTE 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.
- Moreover, the FTTX council stated that to realize the maximum benefit from 5G infrastructure; it will take eight-times more extensive optical fiber network will be needed than currently have laid down. Advent to that, they also mentioned that over 89% of the traffic would be on the fiber network whereas only 11% of it will rely on the mobile network.
- Further, the rapid growth of mobile broadband with an increase in big data analytics coupled with cloud computing are some of the factors driving the demand for new data center infrastructures in the North American region. The region also comprises a considerable amount of data centers. Multiple enterprises are switching from hardware to software-based services and are anticipated to be an addressable market for data center installations. Moreover, according to the cloud scene, there are more than 2500 data centers in the United States, more than 250 data centers in Canada​

Competitive Landscape

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:

- 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.

Reasons to Purchase this report:

- The market estimate (ME) sheet in Excel format
- 3 months of analyst support

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Table of Contents

1 INTRODUCTION
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 Forces 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​

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 Type
6.1.1 Amplitute Modulator
6.1.2 Polarization Modulators
6.1.3 Phase Modulators
6.1.4 Analog Modulators
6.1.5 Other Types
6.2 Application
6.2.1 Optical Communication
6.2.2 Fiber Optic Sensors
6.2.3 Space and 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
7.1.12 *List not exhaustive

8 INVESTMENT ANALYSIS

9 FUTURE OF THE MARKET