PUBLISHER: The Business Research Company | PRODUCT CODE: 1888497
PUBLISHER: The Business Research Company | PRODUCT CODE: 1888497
Ultra-short reach optical interconnect refers to high-speed data transmission technology designed for very short distances, typically within or between chips, servers, or data center racks. It enables faster communication, reduced latency, and lower power consumption compared to traditional electrical interconnects.
The primary products of ultra-short reach optical interconnects are board-to-board interconnects and rack-to-rack interconnects. Board-to-board interconnects are electrical or optical connectors that enable direct signal and power transmission between two or more printed circuit boards (PCBs) within an electronic system. These interconnects use various technologies such as vertical-cavity surface-emitting laser-based interconnects (VCSEL), silicon photonics (SiPh), and micro light-emitting diode-based links (µ-LED). They support data rates of less than 25 gigabits per second (GBPS), 25 to 50 GBPS, 50 to 100 GBPS, and more than 100 GBPS, and operate over distances of less than 1 meter, 1 to 5 meters, and more than 5 meters.
Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report's Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.
The rapid rise in U.S. tariffs and the subsequent trade frictions in spring 2025 are having a major impact on the electrical and electronics sector, with semiconductors, display panels, and rare-earth metals (essential for batteries and motors) subject to steep duties. Consumer electronics brands face profit erosion, as competitive markets limit their ability to pass costs to buyers. Industrial electronics manufacturers, meanwhile, grapple with delayed projects due to shortages of tariff-impacted components like printed circuit boards. Companies are responding by relocating assembly to tariff-exempt countries, increasing inventory buffers, and redesigning products to reduce dependency on restricted materials.
The ultra-short reach optical interconnect market research report is one of a series of new reports from The Business Research Company that provides ultra-short reach optical interconnect market statistics, including ultra-short reach optical interconnect industry global market size, regional shares, competitors with a ultra-short reach optical interconnect market share, detailed ultra-short reach optical interconnect market segments, market trends and opportunities, and any further data you may need to thrive in the ultra-short reach optical interconnect industry. This ultra-short reach optical interconnect market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.
The ultra-short reach optical interconnect market size has grown rapidly in recent years. It will grow from $1.73 billion in 2024 to $2.06 billion in 2025 at a compound annual growth rate (CAGR) of 19.2%. The growth in the historic period can be attributed to increasing demand for high-speed data transfer in data centers, rising adoption of cloud computing services, growing deployment of artificial intelligence and machine learning workloads, increasing traffic from video streaming and content delivery networks, and expanding need for energy-efficient data communication solutions.
The ultra-short reach optical interconnect market size is expected to see rapid growth in the next few years. It will grow to $4.10 billion in 2029 at a compound annual growth rate (CAGR) of 18.8%. The growth during the forecast period can be attributed to the increasing shift toward next-generation artificial intelligence data centers, rising adoption of co-packaged optics and on-board optical solutions, growing demand for ultra-low latency communication in edge computing, increasing penetration of 5G and beyond-5G network infrastructure, and greater focus on reducing power consumption and heat dissipation. Key trends in the forecast period include development of low-power optical modules, integration of optical and electronic packaging, innovation in optical modulation formats, integration of high-density interconnect architectures, and development of chip-to-chip optical links.
Rising high-bandwidth connectivity is expected to drive the growth of the ultra-short reach optical interconnect market going forward. High-bandwidth connectivity refers to communication links or networks that support the transmission of large amounts of data at very high speeds, enabling efficient and seamless data transfer between devices or systems. This rise is driven by the growing adoption of cloud computing, which requires faster and more reliable data transmission to support large-scale data storage, real-time processing, and seamless access to cloud-based applications. Ultra-short reach optical interconnect enhances high-bandwidth connectivity by enabling faster, energy-efficient, and low-latency data transmission between chips and devices within data centers and high-performance computing systems. For instance, in November 2024, according to the UK Parliament's House of Commons Library, a UK government body, 78 percent of UK premises had access to gigabit-capable broadband as of January 2024, up from 72 percent in January 2023 and 64 percent in January 2022. Therefore, rising high-bandwidth connectivity is driving the growth of the ultra-short reach optical interconnect market.
Primary companies operating in the ultra-short reach optical interconnect market are focusing on developing innovative solutions such as high-density, low-power optical interconnect technologies to enhance data transfer efficiency in AI and data center infrastructures. High-density, low-power optical interconnect technologies are advanced data transmission systems that enable faster, energy-efficient communication between closely packed computing components within AI and data center environments. For example, in October 2025, Semtech Limited, a US-based technology company, launched 1.6T multimode optical chipsets tailored for AI infrastructure in data centers. The launch included sampling of key physical medium dependent (PMD) components such as the FiberEdge GN1878 200G-per-channel vertical-cavity surface-emitting laser (VCSEL) driver and the GN1836 200G-per-channel transimpedance amplifier (TIA). These advanced components power ultra-short reach optical interconnects capable of delivering up to 1.6 terabits per second of aggregate bandwidth, meeting the growing data transmission demands of AI and machine learning workloads. With a multimode design that optimizes power efficiency and reduces cost per bit, the solution is ideal for high-density AI cluster environments. This development strengthens Semtech's leadership in optical connectivity and lays the foundation for future scalability toward 3.2T solutions in next-generation data centers.
In October 2025, Ciena Corporation, a US-based technology company, acquired Nubis Communications for $270 million. Through this acquisition, Ciena aims to strengthen its data center connectivity offerings by integrating high-performance, low-power interconnect technologies tailored for AI workloads. Nubis Communications Inc. is a US-based company providing ultra-short reach optical interconnect solutions.
Major players in the ultra-short reach optical interconnect market are Cisco Systems Inc., Intel Corporation, Broadcom Inc., Mitsubishi Electric Corporation, Sumitomo Electric Industries Ltd., NVIDIA Corporation, Fujitsu Limited, NEC Corporation, Corning Incorporated, Amphenol Corporation, Molex LLC, Marvell Technology Inc., Ciena Corporation, Lumentum Holdings Inc., Ayar Labs Incorporated, Huawei Technologies Co. Ltd., Celestial AI Incorporated, Skorpios Technologies Incorporated, OpenLight Incorporated, and Ranovus Incorporated.
North America was the largest region in the ultra-short reach optical interconnect market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in ultra-short reach optical interconnect report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa.
The countries covered in the ultra-short reach optical interconnect market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.
The ultra-short reach optical interconnect market consists of revenues earned by entities by providing services such as high-speed data transmission services, optical component integration services, data center interconnect solutions, testing and maintenance services, and consulting and deployment services. The market value includes the value of related goods sold by the service provider or included within the service offering. The ultra-short reach optical interconnect market also includes sales of optical transceivers, active optical cables, optical connectors, silicon photonics modules, and optical engines. Values in this market are 'factory gate' values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.
The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).
The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.
Ultra-Short Reach Optical Interconnect Global Market Report 2025 from The Business Research Company provides strategists, marketers and senior management with the critical information they need to assess the market.
This report focuses on ultra-short reach optical interconnect market which is experiencing strong growth. The report gives a guide to the trends which will be shaping the market over the next ten years and beyond.
Where is the largest and fastest growing market for ultra-short reach optical interconnect ? How does the market relate to the overall economy, demography and other similar markets? What forces will shape the market going forward, including technological disruption, regulatory shifts, and changing consumer preferences? The ultra-short reach optical interconnect market global report from the Business Research Company answers all these questions and many more.
The report covers market characteristics, size and growth, segmentation, regional and country breakdowns, competitive landscape, market shares, trends and strategies for this market. It traces the market's historic and forecast market growth by geography.
The forecasts are made after considering the major factors currently impacting the market. These include the technological advancements such as AI and automation, Russia-Ukraine war, trade tariffs (government-imposed import/export duties), elevated inflation and interest rates.