The demand for optical connectivity in AI clusters is extremely strong, creating a new multi-billion dollar segment of the global optical module market. Optical module sales for AI clusters will increase from $2 billion in 2023 and less than $1 billion in 2022 to $4 billion in 2024.

This is a huge business opportunity for the optics industry, but it cannot be taken for granted. Optical module vendors must work closely with AI customers to develop specialized solutions to support future needs.

Higher bandwidth, coupled with improved optical device reliability and energy efficiency, are the most important factors supporting AI clusters. Linear drive Pluggable (LPO) and co-packaged optics (CPO) are emerging as viable solutions to reduce power consumption. There are also multiple directions to improving bandwidth. However, none of these solutions will work unless the reliability of the optics is improved.

Improved reliability will be the most important factor in determining the right solution for the next generation of optical connectivity. Higher bit error rate requirements must be met first, followed by FEC and enhanced DSP performance. In addition, it is also necessary to reduce the failure rate and extend the service life of the equipment. New technologies such as quantum dot lasers may have a chance to enter the market, but will also require many incremental improvements to existing methods.

The path to higher bandwidth will also depend on the relative reliability of optical interconnections. The ability to achieve higher channel rates or highly parallel optical connections using parallel fiber or multi-wavelength lasers depends not only on cost and power consumption, but also on whether these solutions are more reliable.