On June 16th, LightCounting, an optical communication research institution, predicted that after a mediocre market performance in the first quarter, the sales of optical modules in this quarter will increase by 10% month on month. As shown in the figure below, most of the growth comes from the contribution of 800G Ethernet optical modules. Meanwhile, although the sales data for the first batch of 1.6 are not shown in the figure, they still contribute to the market in the second quarter. In addition, as Amazon and Meta transition to higher speed optical modules, sales of 400G Ethernet optical modules are expected to decline.

Sales of 400G and 800G active optical cables (AOC) will also remain strong. Meanwhile, due to seasonal factors, DWDM, FTTx, and WFH optical modules that performed weakly in Q1 are expected to rebound in Q2, which will also drive the Q2 market to strengthen. However, the telecommunications market is not expected to experience a significant recovery. In Q1 2025, the revenue of the top 15 telecommunications service providers remained unchanged year-on-year, but capital expenditures decreased by 5% year-on-year.

Alphabet、 Amazon Meta、 Microsoft and Oracle's expenditures in January 2025 continue to be significantly higher than the same period in 2024. Oracle's expenditure increased by 233%, but it is the smallest among the top 5. Oracle's expenditure in 2024 is less than $11 billion, while Meta's is $39 billion and Amazon's is $83 billion. Oracle's Q1 expenditure reached $5.6 billion, accounting for over 50% of its full year expenditure in 2024.

In terms of Chinese Internet manufacturers, Alibaba announced that it plans to invest more than 380 billion yuan (about $53 billion) in artificial intelligence infrastructure in the next three years. Baidu spent 398 million US dollars in Q1 2025, a year-on-year increase of 41% and a month on month increase of 23%. Tencent spent $3.7 billion in Q1 2025, a year-on-year increase of 89% and a month on month decrease of 36%.

It is understood that LightCounting's quarterly market update report aims to provide an easy to understand overview of the growth trend of optical modules, and is based on detailed quarterly sales data collected from LightCounting's exclusive vendor survey for analysis. The report includes performance indicators and reviews for top telecommunications and cloud service providers, network and data communication equipment manufacturers, as well as optical component and semiconductor suppliers, to help understand the key demand drivers affecting optical module sales.