by 
The global fiber optic connector market is forecast to reach $4.9 billion by 2020, with a compound annual growth rate (CAGR) of 9.9 percent from 2015 to 2020, according to a new Allied Market Research report. To meet growing opportunities across multiple applications, interconnect manufacturers are growing their product portfolios through new product developments and acquisitions.
The research firm attributes the strong growth to rising demand for high-bandwidth services, together with increased cloud applications, audio and video services, TV-on-demand and online gaming. The report, World Fiber Optic Connectors - Market Opportunities and Forecasts, 2014 – 2020, finds that the North American region will hold the highest CAGR of 9.1 percent during the forecast period, thanks to high adoption of fiber optic connectors in data centers, enterprises and security sectors.
In enterprises, the adoption of fiber optic connectors is related to IT departments improving their network infrastructure and increasing operational efficiency. These interconnects offer higher bandwidth, higher reliability, and improved security.
Increased data center and enterprise demand also will contribute to growth in many related fiber optic component areas. For example, IHS Infonetics recently reported that revenue for 10-, 40- and 100-Gigabit optical transceivers sold into the enterprise and data center markets grew 21 percent in 2014 to $1.4 billion. The research company attributes the revenue growth to increased 40G quad small form factor pluggable (QSFP) spending.
"40G transceivers are ramping up hard as data centers deploy 40GbE, particularly as a high-density 10G interface via breakout cables. 40G QSFP demand growth over single-mode fiber is primarily a result of large shipments to internet content providers Microsoft and Google," said Andrew Schmitt, research director for carrier transport networking at IHS Infonetics, in a statement.
"The market for 100G data center optics is accelerating, but it has yet to be turbocharged by widespread data center deployment in the way 40G QSFP optics have. This will change dramatically in 2016 as cheap 100G silicon reaches production and QSFP28 shipments surge as a result," Schmitt said continued. "Next year is going to be huge for 100GbE."
Sumitomo's Lynx2 CustomFit MPOQ8 Splice-On Connector
Some connector makers, like Sumitomo Electric Lightwave, have already developed products around QSFP. The company recently launched its Lynx2 CustomFit MPOQ8 Splice-On Connector. Sumitomo claims the connector is the “industry’s first 8-fiber QSFP -40G– SR4 MPO splice-on connector that facilitates fast and easy 40 and 100 GbE data center and enterprise network connectivity with maximum cost savings.”
The key benefit here is big cost savings. By using an 8-fiber solution instead of a traditional 12-fiber solution, it solves optical performance and compatibility issues, “eliminating unused fibers, unnecessary connectivity points, and conversion module hardware for maximum cost savings,” said the company.
Sumitomo estimates that by eliminating the conversion modules, alone, it can save hundreds of dollars per port, which can translate into hundreds of thousands of dollars in cost savings in larger 40- and 100-GbE deployments.
In addition to higher adoption in data centers and enterprises, the increased adoption of mobile devices has boosted the demand for high-speed data services, which is a key factor in accelerating growth of fiber optic connectors, said Allied. “The increasing fiber-to-the-premises, fiber-to-the-home and fiber-to-the-building applications for improved high bandwidth services also supplement the growth of fiber optic connectors market.”
As demand increases, interconnect manufacturers are developing new products to meet specific requirements around data centers and enterprises.
One example is TE Connectivity’s Osmium high-density fiber optic chassis, which is a module system consisting of a 19-inch chassis, blades, and cassettes. The biggest benefits of the system in data centers is to shrink floor space use and reduce costs by deploying high-density connectivity. The Osmium high-density fiber chassis is said to offer up to 45 percent more density than the nearest equivalent solution.
“Data centers are very expensive facilities. Their cost per square meter can reach up to 15 000 EUR. In parallel, thanks to the development of cloud services, mobile web usage, and digital services, there is an increasing need for more data management and storage capacities, which puts existing data centers under pressure,” says Alastair Waite, head of TE Connectivity’s EMEA data center business group, in a statement.
“Consequently, making the best use of every square meter becomes a priority. This makes physical infrastructure density an essential parameter for data center managers of. The Osmium high density fiber optic chassis enables the expansion of storage and compute capacity within the same floor space and reduces the cost per point of connection for data center managers and network operators,” Waite continued.
Other suppliers are expanding their portfolios through acquisition to meet growing demand for optical communications. One example is Molex Inc., which recently acquired Oplink Communications. The acquisition strengthens Molex’s optical portfolio for telecommunications, where fiber optic connectors are primarily used, and datacom networking.
Fiber optic connector in telecommunications is expected to grow at a CAGR of 8.3 percent over the forecast period, according to Allied. While telecom is the biggest segment for fiber optic connectors, Allied reported the increasing need of high-bandwidth services and applications such as high-density networks, inter/intra building, security systems, and community antenna television are also driving big adoption rates.
With growing requirements for data security in the defense and aerospace sector, there is a “huge demand for fiber optics connectors in the security sector for inherent security, huge bandwidth capabilities and protection against interference,” according to Allied. Fiber optic connectors in security systems is forecast to grow at a CAGR of 12.4 percent from 2015 to 2020. This will drive “potential growth opportunities for players in this market,” said Allied.
However, there are challenges. The Allied report finds the high initial investment associated with the fiber optic connectors will limit market growth. In addition, fiber optic connectors face a threat from emerging wireless broadband technologies, said Allied.
