How long will the price of optical modules rise

Optical module prices are expected to continue rising through 2026, particularly for high-speed 800G and 1.6T modules, due to supply constraints and technological upgrades.

Current Market Drivers

The price of optical modules has been increasing sharply due to exploding demand for AI computing and data center expansion, especially for 800G and 1.6T modules, which are in short supply. High-end production capacity is limited, with orders already scheduled through Q2 2025, and technological iteration toward higher speeds is driving costs up, as 800G modules are currently 50–100% more expensive than 400G modules .

Supply Constraints

Several factors are contributing to the upward price pressure:

• High-speed optical chip shortages: Self-sufficiency for chips above 25G is below 30%, limiting production .
• Rising raw material costs: Indium phosphide substrates have increased by 50% .
• Limited advanced packaging capacity: Only a few manufacturers, such as TSMC and ASE, can produce high-end modules .
• Geopolitical and policy pressures: Diversification of supply chains and domestic subsidies are increasing short-term costs .

Expected Timing of Price Increases

• 2025: Prices for 800G modules surged due to hyperscaler demand, with 1.6T modules entering initial production but remaining limited .
• 2026: Mass production of 200G/lane VCSEL and silicon photonics solutions is expected, which may sustain high prices for advanced modules while gradually stabilizing supply .
• Beyond 2026: As production capacity for 800G and 1.6T modules expands and supply chain bottlenecks ease, price growth may moderate, but high-speed modules will likely remain more expensive than legacy 400G solutions .

Market Outlook

Data centers will continue to dominate demand, driven by AI and cloud workloads, while 400G modules may see more competitive pricing due to increased manufacturer participation . However, high-speed modules (800G/1.6T) will remain in short supply, keeping prices elevated through at least 2026 .

Key Takeaway

If you are planning purchases or investments, expect optical module prices to remain high in 2026, particularly for 800G and 1.6T modules, with potential stabilization only as production capacity and supply chains catch up with demand. Strategic procurement and early ordering may help mitigate cost increases.