The shift to cloud services and virtualized networks has made data centers the center of the industry, meaning that the connections within and between data centers have a significant impact on the delivery of business and personal services. Huge data centers are being built all over the world, and these need to be connected. To meet this need, optical module and device vendors are developing solutions based on PAM4 encoding and 64QAM, providing coherent modulation to reduce connection costs and increase bandwidth per connection.

     Connections to servers have mostly reached 25Gbit/s, and links between switches in large data centers have reached 100Gbit/s. The introduction of the SFP28 and QSFP28 modules using integrated new technologies and efficient manufacturing technologies has reduced the cost of these connections and facilitated large-scale market growth. The next phase is to introduce a 100G single-lambda solution and a cost-effective 400G module for links between switches. The physical layer (PHY) equipment required for this step has been available, 12.8Tbit/s switching equipment has been put into production, and the first 400G QSFP-DD and OSFP optical module has been demonstrated.

    The rise of the very large data center operators has dramatically changed the market. The process of switching from 10G and 40G to 25G and 100G is very fast. The scale and volume of new or upgraded data centers means that as long as the prices are right, devices are up and run, and new technology can be shipped in bulk. At this stage, the first 400G PHY equipment and optical modules for data centers are available and vendors are already vying for market share as they await the promised large-scale deployment by leading VLPS.
    Many companies that benefit from 25G and 100G are putting their investments into single-lambda PAM4 100G and 400G solutions for data centers. This requires new PAM4 PHY devices to meet the power limits of 400G OSFP and QSFP-DD modules. Some companies have also invested in 50G and 200G PAM4PHY to achieve economical and efficient upgrades of 25G and 100G. The 50G SFP56 and 200G QSFP56 modules are expected to be temporary solutions, but it is unclear how widely or for how long. The 40G is a temporary solution that lasts for years.