800G Optical Transceiver Market Analysis

In an era defined by the rapid expansion of cloud services, streaming platforms, 5G networks, and the Internet of Things (IoT), data centers are facing unprecedented challenges. The surge in data traffic has created an insatiable appetite for larger bandwidth and lightning-fast data transfer rates. As a result, the demand for 800G optical transceivers is skyrocketing, heralding a new era of connectivity and innovation in data center settings.

Forecast for 800G Optical Transceiver Demand in 2024

Assuming a demand of 5 million for 800G optical transceivers in 2024, Google may need to reach at least 2-3 million units. If the demand for HPC continues to surge, the ratio between Google and NVIDIA is expected to hover around 4:6, with Google holding 4 units and NVIDIA-related products occupying 6. Marvell currently lacks forecasts for NVIDIA-related products based on inputs from companies like Amazon, Meta, or Microsoft, thus relying heavily on NVIDIA for predictions.

Looking ahead to the next year, a significant system dubbed GH200 is anticipated, integrating GPUs such as A100 and H100 and interconnected via Mellanox switches. For more information about NVIIA DGX H100, you can check out this article: Introduction to NVIDIA DGX H100. The sales dynamics of A100, H100, the rollout schedule of the new system DGX GH 200, and the overall sales landscape are poised for some adjustments. Presently, the ConnectX-7 network card operates at 400G, but an 800G network card, ConnectX-8, is slated for release next year. While the current usage of A100 and H100 includes a mix of 400G and 800G optical transceiver, future trends may lean towards 800G, prompting adjustments in demand forecasts and algorithms for these components.

Main Data Center Customer Demand Situation

• Google operated within a 400G environment, utilizing an 8×50 electrical port converted into an 8×50 optical port, necessitating an 8-in-8-out DSP chip for data center architecture.

• Amazon's 400G setup involves an 8×50 electrical port transformed into a 4×100 optical port using a DSP chip, indicating the utilization of different chip types between the two companies.

• As for Microsoft and Meta, their data centers primarily relied on 100G infrastructure. While Meta initially considered transitioning to 200G or 400G, the current focus remains on the 200G range due to substantial demand, reportedly exceeding one million units annually.

• Microsoft had plans to upgrade to 400G last year but postponed the firmware or upgrade implementation due to internal deliberations and a slowdown in market demand. There are speculations that Microsoft might proceed with the 400G upgrade in the latter half of this year, although reconsideration due to HPC factors or a leap to 800G is also plausible.

Before NVIDIA's AI-related demands emerged, Google was at the forefront of numerical environments, swiftly advancing towards 800G, while Amazon settled at 400G, Meta at 200G, and Microsoft aimed for 400G but is yet to commence infrastructure development, representing the current landscape of existing data centers.

Forecast of the Situation in 2024

Marvell is a leading global semiconductor manufacturer providing a full range of broadband communications and storage solutions. Historically, Marvell commanded a substantial market share of at least 60-70% for PAM4 DSPs, covering single-channel speeds ranging from 50G to 100G, with the potential to reach 80% when assessed by shipment volumes.

In the upcoming year, we anticipate that the revenue generated from 400G PAM4 DSPs may either stabilize or experience a slight decline. This is primarily due to the lack of significant growth in shipment volumes, compounded by Google's transition towards 800G demand, resulting in a deceleration of 400G demand. As a result, the main driver of growth will be the adoption of 800G optical transceivers. If this year's revenue stands at $200 million, we project it to reach $400 million next year.

Other segments within the DSP business are expected to see modest growth, likely ranging between 10-20%. Specifically, the customized module business for Microsoft and the Coherent DSP business may experience an average growth rate of approximately 20%, translating to an increase of $100-200 million.

Therefore, if this year's total revenue amounts to $1.4 billion, we anticipate a growth of $300-400 million next year, resulting in a total revenue range of $1.7-$1.8 billion.

Summary

In the ever-evolving landscape of data centers and networking technology, the demand for higher bandwidth and faster data transfer rates continues to soar. As we look ahead to 2024, the forecast indicates a significant shift towards 800G optical transceivers, driven by the expansion of cloud services, 5G networks, and the Internet of Things. This surge in demand presents both challenges and opportunities for semiconductor manufacturers like Marvell, who must adapt to meet the evolving needs of their customers.

At FS, we understand the importance of staying ahead of the curve in terms of technological advancements and market trends. That's why we offer a comprehensive range of high-quality optical transceivers, including 800G solutions, to support the growing demands of modern data center environments. Whether you're looking for 400G or 800G optical transceivers, network switches, or other networking equipment, FS has you covered with reliable products and expert support to help you stay connected and competitive in today's digital world.