This report is an update to our 1Q25 report, published in February 2025. It includes our latest 800ZRx forecasts and draws on quantitative data available in the Optical Components Report.
Pluggable coherent optics are now the dominant form of telecom (outside the datacenter) optics, and lead in total bandwidth deployed, total market size, and bandwidth growth. Pluggables are being deployed in huge numbers for datacenter interconnect as AI demand has surged. In traditional telco networks, pluggables are reaching parity in performance with embedded optics, especially at lower speeds, while offering lower total cost and cost/bit. Long-term, embedded optics will be limited to only the most difficult (albeit profitable) routes to serve – namely subsea and ultra-long haul.
The dominance of pluggables will expand in 2026 with the massive deployment of 800ZRx for scale across networks and it will continue in the future as 1600ZR comes to market. Coherent pluggables may eventually infiltrate the datacenter as Coherent Lite, where deployments could reach 10x the volume of modules deployed for DCI (see Coherent Lite: Technology, Applications and Forecast).
This report features the trends favoring pluggable coherent optics as well as the companies positioned to benefit.
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