LightCounting: NPO Is Hot, but Pluggables Still Dominate the Market
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LightCounting's latest quarterly report says NPOs dominated much of the discussion at the recent CIOE, much as the industry's enthusiasm for LPOs a few years ago. Yet sales of retimed pluggable optical modules continue to hit new highs, with Ethernet optical modules accounting for the bulk of overall sales.
The original article contrasts sales data with the hype, helping to gauge the real pace of NPO and pluggable optical modules
C114 News, September 22 (Shui Yi) — In its latest quarterly market report, optical communications market research firm LightCounting wrote that NPO dominated many discussions at the recently concluded CIOE. A few years ago, the industry was similarly captivated by linear-drive pluggable optics (LPO), yet sales of retimed pluggable optics continue to set new records.
The chart below shows the latest quarterly optical module sales data, along with LightCounting's forecast for the next two quarters. Currently, Ethernet optical modules account for about 80% of the total market, with LPO/LRO contributing very little; the vast majority remain conventional fully retimed modules.
Notably, shipments of the "legacy" 800G 2xDR4 and 2xFR4, as well as 400ZR/ZR+, rose sharply in the second quarter, with unit shipments up as much as threefold year over year, far exceeding expectations. Shipments of 100G and 400G Ethernet optical modules also set new records. Even 10G Ethernet saw some growth. Volume shipments of 1.6T Ethernet optical modules and 800ZR/ZR+ got off to a good start this year, but that is hardly surprising.
Another surprise was that Oracle's capital expenditure last quarter reached $28.5 billion, up 235% year over year and 73% sequentially, nearly $10 billion higher than the company's revenue for the quarter. LightCounting has previously reported on "financial engineering of the future," and this data point is a prime example.
Tencent's second-quarter capital expenditure surged 194% year over year to $7.7 billion, up 68% sequentially. Alibaba's capital expenditure this quarter was $9.9 billion, up 86% year over year and 156% sequentially, mainly used to build AI computing infrastructure. Baidu's capital expenditure this quarter reached $1.67 billion, up 219% year over year and 96% sequentially.
Nvidia commented that it expects cloud companies' capital expenditure to grow another 70% in 2027, similar to the growth reported by the four major cloud companies in 2026. Nvidia should know this well, as the company is structuring multiple financial programs to support this hyper-growth.
Nvidia's data center revenue reached $89.2 billion last quarter, accounting for 93% of total revenue, up 117% year over year and 18% sequentially. Broadcom posted revenue of $29.6 billion last quarter, up 86% year over year and 33% sequentially. Broadcom's revenue from custom XPUs rose 3.5 times year over year, while AI networking revenue grew 2.5 times year over year.
Leading optical module suppliers reported record revenue and profit despite component shortages:
Innolight posted record revenue of $3.3 billion in the second quarter, up 192% year over year and 16% sequentially. Net profit was $1.16 billion, up 249% year over year and 40% sequentially. Gross margin rose during the quarter, mainly driven by sequential growth in 1.6T product shipments.
Eoptolink reported record second-quarter revenue of $1.8 billion, up 109% year over year and 53% sequentially. Net profit was $698 million, up 113% year over year and 74% sequentially. 
Source: C114 Communications Network · Optical Communications · c114.com.cn