Optical Amplifier Market Expected to Reach $1.8 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Optical Amplifier Market," The optical amplifier market was valued at $916.37 million in 2021, and is estimated to reach $1.8 billion by 2031, growing at a CAGR of 6.9% from 2022 to 2031.

Optical amplifiers amplify light without converting it to an electrical signal and is an extremely important device that supports long-distance optical communication networks. The transmission loss of light passing through an optical fiber cable cannot be ignored when the distances are long, and hence, it becomes necessary to amplify the light using an optical amplifier.

One of the driving factors of the optical amplifier market size is the development of data centers. The increase in the use of cloud services, and the growth of e-commerce, and big data analytics have led to an increase in demand for data centers because these trends have resulted in an exponential increase in the amount of data that needs to be processed and stored. Optical amplifiers play a crucial role in the communication system of the data center, as they help to boost the signal strength and stop it from becoming indistinguishable. Another driving factor of the market is the rising deployment of smart cities and smart homes. The deployment of smart cities involves the use of various technologies such as Internet of Things (IoT) sensors, traffic management systems, and security cameras, which all require high-speed and reliable data transmission.

The use of optical amplifiers in the infrastructure enabling such transmission may significantly improve the efficiency of the systems. Further, the rising demand for high-speed data transfer is also instrumental in driving the optical amplifier market growth. The demand for high-speed data transfer is driven by the development of new technologies such as 5G which make it possible. Optical amplifiers are used to amplify optical signals in fiber optic communication systems, which are widely used in various end-use industries such as IT and telecommunication, healthcare and life sciences, and the industrial sector.

On the other hand, the required high initial investment in optical amplifiers is withholding its market. Optical amplifiers are expensive to purchase and install. The cost of these devices may vary depending on the type of amplifiers being used and the specific requirement of the network. Furthermore, the price of EDFA is also affected by its use of Erbium, which is a rare-earth element. Meanwhile, the increase in use of hyperconverged infrastructure (HCI) is expected to provide numerous opportunities during the forecast period, including for hybrid optical amplifiers. Optical amplifiers play a critical role in supporting the networking component of HCI as they are used to boost the signal strength in optical fiber cables, enabling high speed and data transfer over long distances.

In terms of market segmentation by type, the market was dominated by the fiber amplifier segment in 2021, whereas the semiconductor optical amplifier segment is expected to witness a higher growth rate during the forecast period. Fiber amplifiers primarily consist of erbium-doped fiber amplifier (EDFA) and Raman fiber amplifier (RFA). Their market is further driven by their important characteristics such as the ability of EDFAs to amplify multiple optical signals simultaneously and to be used with wavelength division multiplexing (WDM) technology.

In terms of market segmentation by function, the market was dominated by the in-line amplifier segment in 2021, whereas the pre-amplifier segment is expected to witness a higher growth rate during the forecast period. An in-line amplifier is primarily used for compensating splitter losses or fiber losses in an optical fiber transmission system. The important performance parameters of in-line optical amplifiers are the noise figure and saturation output power, on account of the weak incoming signals. In terms of market segmentation by industry vertical, the market was dominated by the IT and telecommunication segment in 2021, which is also expected to witness a higher growth rate during the forecast period.

The change in habits of people and changing processes of companies are expected to drive the use of optical amplifiers in the IT and telecommunications industry. Furthermore, the industry is a hotbed of innovation, with new types of technologies and equipment released frequently. This focus on research and development is also expected to be a major driver of the optical amplifier market trends. In terms of region, the market was dominated by North America in 2021, which is also anticipated to expand at a faster rate during the forecast period. North America is among the places, so far, with the highest adoption of the Internet of Things (IoT) and Industry 4.0. These technologies enable significant amounts of data transfers, which require optical amplifiers to take place in a reliable manner. It is also one of the largest manufacturing hubs of the world, after China. In combination, this provides significant opportunities for the purchase and use of optical amplifiers.

Key Findings of the Study

• Based on type, within the optical amplifier market share, the fiber amplifier segment accounted-for major share of the optical amplifier industry in 2021, while the semiconductor optical amplifier segment is expected to witness faster growth during the forecast period.
• Based on function, in the optical amplifier market analysis, the in-line amplifier segment accounted-for higher share of the optical amplifier market in 2021, while the pre-amplifier segment is anticipated to increase faster during the forecast period.
• Based on industry vertical, the IT and telecommunication segment dominated the optical amplifier market in 2021, which is also expected to expand at a faster rate during the forecast period.
• Based on region, North America accounted for the largest share of the global optical amplifier market in 2021, and is also anticipated to grow faster during the forecast period.

The optical amplifier market players profiled in the report include Broadcom Inc., Coherent Corporation, Furukawa Co. Ltd., NEC Corporation, Source Photonics, APE Angewandte Physik und Elektronik GmbH, EMCOR Group Inc., IPG Photonics Corporation, Lumentum Operations LLC, and Sumitomo Electric Industries, Ltd. Various strategies such as collaborations & partnerships, product launches, and acquisitions have been adopted by market players to expand their foothold in the digital multimeters market.