Optical component companies could set profit record: LightCounting

LightCounting asserts in its recently released "State of the Optical Communications Industry" report that optical component suppliers could set a group record for profitability in 2016.

Of course, it wouldn't take much to achieve such a milestone. The market research firm points out that the average profitability of optical component and module suppliers over the past five years has been "very close to zero," in the words of a LightCounting press release.

However, LightCounting points out that the profitability picture brightened for many such companies last year. Optical component and module vendors on average showed a profit of 2% in 2015, compared to a loss of 1% in 2014. And results in general have shown even greater improvement over the last few quarters, and now LightCounting believes these vendors as a group could reach 5-7% profitability in 2016-2017. Perhaps sadly, such mid-single-digit profitability would set a new record, the market research firm asserts.

Still, such growth could raise the estimation of optical component and module vendors in the eyes of the financial community, LightCounting points out.

"Many startup companies, betting their future on supplying high-speed optics to cloud vendors, develop products based on silicon photonics," commented Dr. Vladimir G. Kozlov, founder and CEO of LightCounting Market Research. "High-valued acquisitions of silicon photonics companies and the recent IPO of Acacia offered much needed success stories for investors. However, the risk remains high. Many other vendors, just starting to ship silicon photonics based products now, will have to prove themselves in 2016-2018."

The new "State of the Optical Communications Industry" report offers profitability analysis across the industry supply chain, including service providers, cloud companies, equipment, and component suppliers. The report also reviews strategies for sustainable profitability, including development of new manufacturing technologies.

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For more information on optical components and suppliers, visit the Lightwave Buyer's Guide.