Introduction
This report is an update and expansion of Cignal AI’s initial Optical Circuit Switching (OCS) Market report from July 2024. In the six months since that report’s publishing, four new OCS vendors have been added to the report, more details have been provided by existing vendors, more applications are being investigated by end users, and there is a much more concrete sense that the small revenue streams seen today are building quickly towards significant revenue in the near future.
Changes from the last OCS report include:
- All sections updated with the latest information gathered from vendor discussions and public announcements
- Additional details about some of the smaller applications plus one new application (DCI)
- More information on the underlying technologies, especially silicon photonics (SiPho)
- Four additional vendors now covered
- A forecast for the total addressable market through 2029
Overview
OCS is not a new concept. In the boom days of the late 90s, a plethora of companies were founded based on using optical switching to automate everything from labs to long-haul networks. Few of those entities still survive, except for limited applications such as programmable patch panels for test environments.
However, interest in OCSs for datacenters and AI applications has been reignited by Google, which has recently demonstrated 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. As a result, other service providers have tasked their engineering teams with investigating the viability of OCSs for use within their networks.
Meanwhile, the Google engineers who worked on those projects have, via career transitions and poaching, cross-pollinated many other service providers who would like to emulate Google’s results. This has the effect of jump-starting efforts at multiple service providers who can now build on experience from the early efforts at Google. These engineers also bring a more intimate knowledge of the benefits of OCSs with them and have catalyzed demand across a larger number of potential customers.
Optical transceiver vendors are now seeing requirements placed on high speed (400GbE and faster) datacenter optics that are directly a result of OCS deployment. Higher output power, bi-directionality, and multi-wavelength options that would not apply in a traditional datacenter network are required for smooth interworking with OCSs.
For years, the OCS TAM has been entirely based on lab automation and network monitoring, with total annual revenue in the low tens of millions of dollars. However, Google has spent between $500 million and $1 billion on OCSs over the last five years. The new TAM for OCSs is still highly speculative, but it will certainly be in the multiple 10s of millions of dollars in 2025 to even single-digit billions of dollars by 2029. 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.
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