Ultra-short Reach Optical Interconnect growing at a CAGR of 20.2% from 2025 to 2030

The global ultra-short reach optical interconnect market size was estimated at USD 2.03 billion in 2024 and is projected to reach USD 5.95 billion by 2030, growing at a CAGR of 20.2% from 2025 to 2030. This growth is driven by rising demand for high-speed, low-latency data transfer in AI, cloud computing, and chip-to-chip communication, as organizations scale infrastructure to handle advanced workloads, cut energy use, and ease bandwidth bottlenecks in dense data centers.  

Moreover, market growth is propelled by continuous innovation in optical technologies, such as silicon photonics, co-packaged optics, and advanced transceiver designs. These advancements enable higher data rates, improved signal integrity, and reduced power consumption, making USR optical interconnects more accessible and cost-effective for a wider range of applications. The rollout of 5G networks, the proliferation of IoT devices, and the emergence of edge computing are increasing the demand for ultra-fast, short-reach optical links that handle dynamic workloads and real-time analytics. Leading technology companies are investing in next-generation optical solutions to enhance AI processing speeds and optimize network architectures for future needs.

The market is further supported by strong investment from the public and private sectors in digital infrastructure, including government initiatives to expand broadband and 5G networks across major regions. Strategic partnerships, mergers and acquisitions, and new product launches are enhancing market penetration and accelerating the adoption of USR optical interconnects worldwide. As digital transformation continues to reshape industries and drive up data volumes, USR optical interconnects are increasingly recognized as essential for enabling high-speed, reliable, and scalable data communication in modern IT environments.

Product Insights

The board-to-board interconnects segment led the market in 2024, accounting for over 51% of global revenue due to their essential role in enabling high-speed, low-latency data transfer within servers, switches, and network appliances. These connections are integral to the architecture of modern data centers, where dense packaging and rapid communication between system boards are necessary for efficient processing. The prevalence of modular server designs and the need for scalable, high-bandwidth internal links contribute to the strong demand for board-to-board solutions. Their compatibility with evolving server and storage technologies further reinforces their leadership in the market.

The rack-to-rack interconnects segment is expected to grow significantly during the forecast period as data centers scale up and require fast, reliable connections between racks to support distributed computing and high-performance workloads. The increasing adoption of spine-leaf network topologies and the rise of AI and machine learning clusters drive demand for efficient rack-level connectivity. These interconnects facilitate seamless data flow across multiple racks, reducing bottlenecks and enabling flexible resource allocation. As data center architectures become more complex, rack-to-rack solutions are increasingly favored for their ability to support rapid scaling and high-density deployments.

Ultra-short Reach Optical Interconnect Market Report Scope