High Speed Interconnect Market to Reach $56.9 Million by 2030 with 7.2% CAGR

The global market for high speed interconnects is projected to reach $56.9 million by 2030, growing at a CAGR of 7.2% from 2024 to 2030. The adoption of low-latency, high-bandwidth interconnects is accelerating due to the proliferation of AI, HPC, and machine learning. High-speed interconnects are playing a foundational role in transforming data-intensive sectors, including cloud computing, AI/ML, autonomous systems, and telecommunications. The need for higher throughput in hyperscale environments is driving the adoption of PCIe Gen5/Gen6, 400G and 800G Ethernet, and advanced InfiniBand interconnects.

The global AI infrastructure revolution is accelerating, and Semtech (NASDAQ: SMTC) is emerging as a critical enabler of this transformation. As data centers grapple with the insatiable bandwidth demands of generative AI and large language models, the 1.6T optical interconnect market is poised to become a cornerstone of next-generation infrastructure. Semtech’s recent product innovations and strategic partnerships position it to capitalize on this high-growth niche, particularly in the realm of power-efficient solutions that align with the sustainability goals of hyperscale operators.

According to a report by Mordor Intelligence, the optical interconnect market is forecasted to grow at a compound annual growth rate (CAGR) of 13.15% from 2025 to 2030, reaching $35.97 billion by 2030 Semtech's Strategic Position in the 1.6T AI Optical ...^[1]. Within this, the 1.6T segment is a standout driver, fueled by the need for ultra-low-latency, high-throughput communication in AI data centers. Hyperscalers like Microsoft and Meta are investing heavily in fiber infrastructure, with 800G and 1.6T optics forming the backbone of their AI clusters Semtech's Strategic Position in the 1.6T AI Optical ...^[1].

Semtech’s innovation edge lies in its power-efficient and design-flexible solutions. The company’s GN1834D transimpedance amplifier (TIA) is a critical component for 8x200G optical modules that deliver 1.6T throughput, enabling the analog performance required for AI cluster connectivity Semtech's Strategic Position in the 1.6T AI Optical ...^[1]. Complementing this, the GN1818 TIA optimizes power consumption in existing 800G infrastructure while preparing for the transition to 1.6T systems Semtech's Strategic Position in the 1.6T AI Optical ...^[1].

Semtech’s strategic partnerships with testing firms like Keysight Technologies ensure that its components meet the rigorous performance standards required for 1.6T environments . This ecosystem support is vital, as the adoption of advanced optical interconnects requires not only hardware innovation but also robust testing and validation frameworks.

Despite the optimism, the 1.6T market faces headwinds. High capital expenditures for advanced transceivers and packaging technologies, coupled with supply chain constraints for photonic ICs, could slow adoption in the short to medium term Semtech's Strategic Position in the 1.6T AI Optical ...^[1]. However, these challenges are unlikely to derail the long-term trajectory. As silicon photonics and co-packaged optics (CPO) technologies mature, costs are expected to decline, making 1.6T solutions more accessible.

For investors, Semtech’s ability to navigate these challenges while maintaining its technological edge will be key. The company’s focus on power efficiency, design flexibility, and strategic partnerships creates a compelling value proposition in a market where differentiation is critical.

Conclusion: A High-Conviction Play in AI Infrastructure

Semtech’s strategic position in the 1.6T AI optical interconnect market is underpinned by its innovative product portfolio, strong customer relationships, and alignment with industry trends. As AI workloads continue to strain existing infrastructure, the demand for high-speed, low-power interconnects will only intensify. Semtech’s ability to deliver both performance and efficiency positions it as a long-term growth story, with the potential to capture significant market share in a rapidly expanding sector.

References:

Semtech's Strategic Position in the 1.6T AI Optical ...^[1] Optical Interconnect Market Size, Outlook 2025 – 2030, [https://www.mordorintelligence.com/industry-reports/optical-interconnect-market]
AI Data Center Market Size, Share & Trends Analysis Report By Component (Hardware, Software, Services), By Data Center Type, By Deployment, By AI Application, By Industry Vertical, By Region, And Segment Forecasts, 2025 - 2030^[2] Interchip Optical Interconnect Market Analysis | 2025-2030, [https://www.nextmsc.com/report/interchip-optical-interconnect-market-3523]
Semtech (SMTC) Q2 2026 Earnings Call Transcript, [https://www.fool.com/earnings/call-transcripts/2025/08/25/semtech-smtc-q2-2026-earnings-call-transcript/]
Keysight Technologies (KEYS): AI Data Center Testing and Growth, [https://www.monexa.ai/blog/keysight-technologies-keys-ai-data-centers-and-pho-KEYS-2025-03-25]
Pluggable Optics for Data Centers Business Analysis Report, [https://www.globenewswire.com/news-release/2025/07/24/3120959/0/en/Pluggable-Optics-for-Data-Centers-Business-Analysis-Report-2025-Market-to-Reach-9-9-Billion-by-2030-Rising-Demand-for-QSFP-DD-and-OSFP-Modules-Creates-Opportunities-in-High-Capacit.html]