Data centers power the digital world, from storing images of cute cats to analyzing terabytes of data to power the next generation of ChatGPT. In their report "Silicon Photonics and Photonic Integrated Circuits 2024-2034: Market, Technologies, and Forecasts", IDTechEx forecasts rapid, short-term global data center growth due to growth in demand for AI and increased use of cloud-based systems globally. The demand for faster, more efficient communication networks has never been greater within data centers. As the volume of data generated and processed continues to soar, now accelerated by AI, traditional electronic interconnects such as copper ethernet have already reached their limits. Conventional optical systems, using basic lasers and photodetectors, do not support the data rates required in the modern data center. For 100G (100 billion bits per second) communications, Silicon Photonic Integrated Circuits (PICs) from the likes of Intel are already being used extensively within data centers, with IDTechEx estimating Intel's sales volumes being in excess of 1.7 million transceivers in 2023. PICs are unlocking even higher data rates, with commercial 800G products being available from the likes of Coherent or Chinese company Innolight.
PICs combine the benefits of optics with the scalability of integrated circuits. These miniature devices integrate multiple photonic functions onto a single, tiny chip, enabling rapid data transmission at the speed of light. Unlike their electronic counterparts, which rely on electrons, PICs use photons to carry information. Whether streaming high-definition videos or processing real-time financial transactions, PIC-based transceivers offer lower latency, especially over longer distances in excess of 10m.
Traditional electronic connections consume significant power over distances greater than two meters due to both resistive losses and capacitive losses (especially at high frequencies). PICs, which primarily see losses upon conversion from electrical to optical, don't see the same losses at high frequencies or long distances, reducing the overall energy footprint of data centers. Operating at high frequencies allows PICs to be used to transmit data at ever-increasing data rates. IDTechEx is forecasting that 1.6T (1.6 trillion bits per second) PIC-based pluggable transceivers will be commercially available by the end of 2024, and by 2026, 3.2T pluggable transceivers will be in data centers by 2026. These speeds will likely come from improved modulators that allow for higher data rates, as well as an increased number of wavelengths from the 8 that is common now to 16. Materials such as TFLN may be critical to achieve even higher speeds beyond 6.4T.
IDTechEx is forecasting that PIC-based pluggable transceiver performance will continue in line with Keck's law, with the data that the data rate of fiber doubles approximately every 18 months. Source: IDTechEx
PIC-based data center (datacom) transceivers compact devices combine both the transmitter and receiver functions, enabling bidirectional communication over optical fibers. PICs allow parallel data transmission, meaning multiple channels can operate simultaneously through wave-division multiplexing (WDM). This parallelism boosts overall throughput per fiber, saving valuable faceplate density and reducing the overall number of fiber-optic cables required in a data center. Data centers can customize PIC-based transceivers to meet specific requirements. PICs for WDM also have applications in telecoms, with IDTechEx noting that PICs for 5G telecoms are to see a 15.8% CAGR (combined annual growth rate)
As AI and machine learning become integral to data center operations, the role of PICs becomes even more critical, as AI models require massive amounts of data for training. PICs allow for high data-rate connections between multiple AI accelerators in different racks, ensuring faster model convergence. In the future, Co-Packaged Optics will enable high data-rate interconnects without compromising latency or power.
The PIC industry is growing rapidly, but integration with existing electronic manufacturing infrastructure, stronger corroboration between simulation and fabrication, and reduced manufacturing times are areas that require significant improvement to reduce PIC design and production costs.
IDTechEx is forecasting a CAGR of 17.0% for the PIC Transceiver for AI in the Data Centers market. To inform the transceiver forecast, IDTechEx analyzed historical Nvidia architectures, looking at the P100, K40, T4, V100, A100, H100, and B100-related systems, finding that due to trends in the ability of AI accelerators to process more and more data, every AI accelerator will likely require on average two optical transceivers for the foreseeable future, with improvements in transceivers likely matching the cadence of improvements in AI accelerators. IDTechEx's analysis covers the number of AI accelerators shipped, shipments of PIC transceivers by data rate, and the average forecasted cost per transceiver, allowing for a comprehensive picture of the PICs for data center space.
For further understanding of the Silicon Photonics and Photonic Integrated Circuit market, players, technologies, opportunities, and challenges, please refer to the IDTechEx report "Silicon Photonics and Photonic Integrated Circuits 2024-2034: Market, Technologies, and Forecasts".
To find out more about this report, including downloadable sample pages, please visit www.IDTechEx.com/SemiPIC.
For the full portfolio of photonics market research from IDTechEx, please see www.IDTechEx.com/research/photonics.
IDTechEx provides trusted independent research on emerging technologies and their markets. Since 1999, we have been helping our clients to understand new technologies, their supply chains, market requirements, opportunities and forecasts. For more information, contact research@IDTechEx.com or visit www.IDTechEx.com.
