Will optical module prices rise in the future

Optical module prices are expected to continue rising through 2026 due to high demand, supply bottlenecks, and technological upgrades.

Current Market Drivers

The surge in AI computing and hyperscale data centers is driving unprecedented demand for high-speed optical modules, particularly 800G and 1. 6T models, which are in short supply. Supply constraints are compounded by limited high-end chip production, complex packaging requirements, and rising costs of key raw materials like indium phosphide.

These factors have already pushed prices of 800G modules 50–100% higher than 400G modules.

Short-

Term Outlook

Analysts forecast that the price trend will remain upward at least through 2026. Goldman Sachs projects strong year-on-year growth in market value, with total optical module sales expected to reach $19. 37 billion in 2026, driven by both volume and unit price increases.

Morgan Stanley highlights that as modules upgrade from 400G to 800G and 1. 6T, unit prices for PCBs alone are rising by $15–$30 per module. Supply-demand imbalances, particularly in high-end chips, will continue to limit production capacity and sustain higher prices.

Medium-

Term Considerations

The transition to 800G and 1. 6T modules is accelerating, and technological iteration is increasing barriers to entry, giving leading manufacturers pricing power. While production capacity may gradually expand, structural shortages and high R&D costs suggest that prices are unlikely to decline significantly before 2027.

Policies supporting domestic production and subsidies for key materials may partially offset costs but are unlikely to reverse the overall upward trend.

Conclusion

Optical module prices are expected to rise steadily through 2026, driven by AI-driven demand, high-speed module adoption, chip shortages, and technological upgrades. Buyers and investors should anticipate continued price pressure in the near term, with potential stabilization only as production capacity and supply chains adjust in the medium term. Strategic procurement and early planning are recommended to mitigate cost impacts.