On July 30, 2026, InnoLight, the global leader in optical modules, will be listed on the Main Board of the Hong Kong Stock Exchange. Based on the primary industry data disclosed in its prospectus, this article systematically reviews the price trends of optical modules, growth trends of various sub-categories (1.6T, silicon photonics, Scale-across), product iteration cycles, cost structures, and more. (PS: The author previously wrote "Why Are Optical Modules Not Engaged in Fierce Competition?", hence "A Second Look".)
Price Changes of Optical Modules from 2023 to Q1 2026
Figure: Average Selling Price of InnoLight's Optical Modules
Driven by technology maturation, yield improvement, and scaled production, the selling prices of optical interconnect products generally show a downward trend over time under comparable specifications of the same transmission rate.
Taking the industry leader InnoLight as an example, the trend of the average selling price of its optical modules is as follows (benefiting from the high prosperity of AI during this period, demand outstripped supply):
High-speed optical modules: The average selling price dropped from RMB 2,838 in 2023 to RMB 2,458 in Q1 2026.
Low-to-medium speed optical modules: The average selling price slightly decreased from RMB 621 in 2023 to RMB 613 in Q1 2026.
The industry's average selling price often fluctuates due to changes in the product mix, especially during the transition cycle to higher-rate products, where the unit price of early higher-rate products is usually significantly higher. For instance, the global average price of high-speed optical interconnect products fell by about 20% from approximately $350 per unit in 2023 to about $280 per unit in 2024, mainly attributed to the maturation of existing product iterations. This price stabilized at roughly $280 per unit in 2025, as the impact of price reductions in existing products was offset by the launch of new 1.6T products and the transition to higher rates.
InnoLight expects the industry's average selling price to rise as 1.6T products gradually increase in production and expand their share in the product mix.
Token Consumption to Grow at a 140% CAGR from 2025 to 2030
Since the end of 2022, the rapid development and popularization of Large Language Models (LLMs) have pushed computing demand into a new era, driving the deployment of high-performance, large-scale computing clusters to meet the computing power requirements for AI training and inference.
With the emergence of new trends such as multimodal large models, Agentic AI, and Physical AI, the daily average token consumption of large models has grown 30 times from 3 trillion at the end of 2023 to 100 trillion in 2025; it is expected to further surge 80 times to 8,000 trillion by 2030.
From 2025 to 2030, the compound annual growth rate of token consumption is projected to reach as high as 140%.
1.6T Optical Modules to Capture 41% Market Share in 2027, Surpassing 800G Modules
The application scenarios of optical interconnects cover two major markets: Datacom and Telecom. In the Datacom sector, optical interconnects not only serve general scenarios but also act as the core foundation supporting AI workloads and enabling high-bandwidth, low-latency data transmission. In the Telecom sector, they ensure high-speed interconnection for core networks, access networks, and metropolitan area networks.
According to forecasts by LightCounting, the Datacom scenario will be the core engine for the expansion of the optical interconnect market. Its market size is expected to grow from $19.4 billion in 2025 to $98.6 billion in 2030, with a compound annual growth rate (CAGR) of 33.8% from 2026 to 2030.
Among them, the 1.6T optical module market will surge from $7.3 billion in 2026 to $44.8 billion in 2030, with a CAGR of up to 57.6%. By 2027, 1.6T optical modules are expected to become the absolute mainstay of the market, capturing a 41% market share and officially surpassing 800G optical modules.
In addition, 3.2T optical modules will see volume shipments in 2028, growing rapidly from $2.1 billion in 2028 to $31.5 billion in 2030.
Mass Production Cycle for Optical Module Generations Shortened from 3-4 Years to 2 Years
The timeline for each generation of optical modules to enter the mass production stage is shown in the chart below.
The time interval for mass production between 100G and 400G, as well as between 400G and 800G optical modules, was three to four years, while the interval from 800G to 1.6T has been shortened to approximately two years.
By 2025, 800G optical module products have fully entered the stage of large-scale deployment, 1.6T products have also transitioned into mass production, and the development of 3.2T products is being accelerated. Over the next five years, 1.6T products are expected to become the mainstream optical interconnect deployment solution, while 3.2T products will gradually enter the commercial verification stage, thereby initiating a new cycle of higher-rate upgrades.
Surge in Scale-up Optical Module Demand, with a CAGR of Up to 297% from 2026 to 2030
In modern data centers, optical interconnects are not only critical for the front-end, which manages data transmission between end-users and data centers, but are also indispensable for supporting the high-performance computing back-end through Scale-out (interconnection between computing nodes) and Scale-up (short-distance, high-density interconnection between servers within a single node).
Furthermore, with the growth of AI workloads, the demand for Scale-across solutions, which enable high-bandwidth, long-distance interconnection among multiple data centers, is also steadily rising.
According to LightCounting data, the market sizes for Scale-up and Scale-out optical modules in 2026 will be $100 million and $25 billion, respectively. Over the next five years, their CAGRs are projected to be an astonishing 297.7% and 19.4%, respectively, with the demand growth rate for the Scale-up architecture being the most rapid.
Silicon Photonics Optical Modules to Grow at a 43.7% CAGR from 2026 to 2030
Given the continuous expansion of data center scale and computing power interconnection requirements, customers face challenges such as excessive power consumption, limited space, and stringent requirements for transmission density and reliability during deployment. Consequently, the market demand for low-power, high-efficiency, high-density, and easily integrable optical interconnect technologies (such as silicon photonics, coherent optical communication, and linear optics) steadily grows.
Silicon photonics modules utilize CMOS-compatible processes to integrate a multitude of photonic functions, such as waveguides, modulators, monitoring photodiodes, and photodetectors, onto a Photonic Integrated Circuit (PIC). After two decades of development, silicon photonics has become a mainstream technology, capable of delivering superior performance, lower costs, higher yields, and scalable manufacturing. Its penetration rate in the global Datacom optical interconnect market is expected to rise from approximately 38% in 2025 to about 73% in 2030, corresponding to a CAGR of 43.7% from 2026 to 2030.
Beyond optimizing the performance and cost of traditional optical modules, the accumulated design capabilities on silicon photonics platforms can be extended to numerous cutting-edge fields such as NPO (Near-Package Optics), CPO (Co-Packaged Optics), and OCS (Optical Circuit Switching), opening up long-term potential space for optical interconnect companies to extend their value chains.
Distribution of Optical Interconnect Cost Structure
The main raw materials for optical interconnects include optoelectronic and electronic chips, passive optical components, PCBs, and structural parts.
Key components used for optical signal generation, modulation, detection, and signal processing, including optical chips, DSPs, and other related parts, typically account for more than 50% of the total material cost of mainstream high-speed optical modules;
Components used for optical coupling, filtering, and signal routing, including lenses, isolators, filters, and couplers, typically account for 10%-20% of the total material cost;
In addition, the PCBs and structural parts in optical modules account for approximately 5%-10% of the total material cost, respectively.