The Optical Circuit Switching Market

Introduction

Optical circuit switching (OCS) is not a new concept. A plethora of companies in the boom days of the late 90s were founded based on using optical switching to automate everything from labs to long-haul networks. Few of those entities survive except in limited applications such as programmable patch panels for test environments.

However, Google has recently reignited interest in OCSs for datacenters and AI applications by demonstrating the power savings and flexibility that OCSs can have in areas such as spine replacement and AI cluster reconfiguration. In public presentations, Google showcased 40% power savings and 30% cost savings with 50 times better long-term uptime for its switching network numbers that are difficult to ignore.

For years, the OCS TAM has been entirely based on lab automation, with total annual revenue in the low tens of millions of dollars. However, over the last five years, Google has spent between $500 million and $1 billion on OCSs. The new TAM for OCSs is still highly speculative, but it ranges from less than $100 million to multiple single-digit billions. The old technology and technologists are being dusted off and joined by a new set of products aimed at putting optical switching inside lucrative and fast-growing AI-centered datacenters.