What We Share Today: 2025 Optical Communication Industry Chain Research Report

Total Pages: 88

The Optical Communication Industry Enters a Boom Driven by AI: High-Speed and Integration Become the Mainstream, with Chinese Enterprises Highlighting Global Competitiveness

Driven by the wave of artificial intelligence, the demand for high-performance computing resources from large models and generative AI is growing exponentially. As the core carrier of high-speed information transmission, the optical communication industry is ushering in a golden era of development. Currently, the global optical communication market scale has exceeded 50 billion US dollars, and the industry as a whole is accelerating its evolution towards high speed and integration. Chinese enterprises have gained global competitiveness in multiple niche segments, shifting from 'following the trend' to 'keeping pace' and even 'leading the race'.

Optical communication refers to a communication technology that uses optical signals as the information carrier. It loads information by modulating the physical characteristics of light, realizes transmission relying on media such as optical fibers, and finally completes photoelectric conversion at the receiving end. Compared with traditional cable communication, it boasts advantages including high speed, large capacity, long transmission distance, low loss and strong anti-interference capability, making it the dominant transmission method for global information networks. It is widely applied in scenarios such as telecom backbone networks, metropolitan area networks, 5G base stations, data center interconnection (DCI) and AI intelligent computing centers. Among them, optical fiber communication is the mainstream form; with its low-loss and high-bandwidth features, it undertakes core transmission tasks such as transnational and intercity backbone networks and DCI. Free-space optical communication, on the other hand, plays an important role in mobile scenarios like satellite communication and underwater communication.

In terms of the industry chain structure, the optical communication industry presents a clear hierarchical system.

Upstream: Centered on optical chips, electrical chips and optical components. Among these, the chip segment features the highest technical barriers and holds the discourse power of the industry—optical chips determine the transmission efficiency of optical communication systems, while electrical chips serve as the 'neural center' for photoelectric coordination.
Midstream: Covers optical modules and optical fibers & cables. The former is the core interface for photoelectric conversion, and the latter is the physical carrier for optical signal transmission.
Downstream: Targets two major markets, namely telecom and data communication. The telecom market focuses on backbone networks, metropolitan area networks and 5G base stations, while the data communication market serves emerging scenarios such as cloud computing vendors' data centers and AI intelligent computing clusters.

In the field of core components, chips are the key to technological breakthroughs.

Optical chips: Domestic enterprises have achieved localization substitution in the low-speed (2.5G/10G) segment. However, the high-speed (25G and above) market is still dominated by overseas leaders such as Coherent, Broadcom and Lumentum. Notably, the value contribution of optical chips increases significantly with the rise of optical module rates, accounting for 60%–70% of the total value in 800G optical modules and even exceeding 70% in 1.6T ones.
Electrical chips: Domestic companies take the lead in the global market share for low-speed (10G and below) products. Nevertheless, the high-speed (25G and above) market is still controlled by foreign manufacturers. That said, domestic enterprises are accelerating the iteration of high-speed products such as 25G and 100G, gradually expanding their market share.

Optical components, regarded as the 'heart' of optical modules, are divided into passive and active types.

Passive components: No external power supply is required. They include optical fiber connectors and optical splitters. Domestic production accounts for 70% of the global optical fiber connector market, and domestic enterprises even hold a 90% global market share in PLC chips for optical splitters.
Active components: Need power supply for operation. Core products include lasers, optical amplifiers and optical transceiver subassemblies (TOSA/ROSA). Localization substitution has been basically achieved for mid-to-low-end lasers in China. Enterprises such as Accelink Technologies and Hisilicon (Huawei) also possess strong competitiveness in the optical amplifier segment. Meanwhile, optical transceiver subassemblies (TOSA/ROSA) have become a core segment independently manufactured by optical module vendors.

In the sectors of optical modules and optical communication equipment, Chinese enterprises' global competitiveness is particularly prominent.

Optical modules: Domestic companies have taken a dominant position in the global market, with 7 enterprises including Infinera (China), NeoPhotonics and Huawei ranking among the top 10 worldwide, among which Infinera (China) tops the list. Currently, 800G optical modules have become the standard configuration for AI intelligent computing centers, while 1.6T optical modules have entered the R&D and testing phase. Co-packaged optics (CPO) and silicon photonics technologies have emerged as the future development directions. Benefiting from their high integration and low power consumption advantages, silicon photonics modules are expected to account for 52% of the global optical module market by 2029.
Optical fibers & cables: China is the world's largest producer and consumer. Enterprises such as Yangtze Optical Fibre and Cable (YOFC), Hengtong Optic-Electric and Zhongtian Technology rank among the top 5 globally, together holding over 40% of the global market share. With the recovery of global demand for data centers and AI computing power, the global demand for optical fibers & cables will return to the growth track starting from 2025. Among them, submarine optical cables are ushering in a new round of prosperity cycle. Huahai Communication, a subsidiary of Hengtong Optic-Electric, has become the world's third-largest submarine optical cable system integrator, participating in nearly 20% of global submarine optical cable projects.

The optical communication equipment market presents a pattern of 'led by Chinese leaders'. Three enterprises—Huawei, ZTE and FiberHome—dominate the domestic market. Among them, Huawei ranks first in the global optical transmission and network access equipment market with a 28.21% share, while ZTE and FiberHome rank fourth and sixth respectively. In the broadband access segment, the global trend of 'fiber replacing copper' drives the steady growth of the GPON equipment market, which is expected to reach a scale of 10 billion US dollars by 2029.

Looking ahead, the continuous release of AI computing power demand will serve as the core driving force for the development of the optical communication industry. High-speed products such as 800G/1.6T and integrated technologies like CPO/silicon photonics will accelerate their popularization. Chinese enterprises have established solid advantages in the mid-to-low-end market, and their technological breakthroughs in high-end chips and core components are advancing steadily. It is expected that Chinese enterprises will occupy a more core position in the global optical communication industry chain, providing a solid 'information superhighway' support for the development of the global digital economy and AI industry.