Ovum assesses Thai flood impact
As previously reported, optical equipment companies who have relied on Fabrinet to manufacture their products have a problem on their hands in the wake of the flooding in Thailand. Ovum's Daryl Inniss believes that second-sourcing options and other contingency plans will limit the damage to these companies' bottom lines.
Inniss, in a brief posted on the Ovum website, lists Oclaro, Emcore, Infinera, Opnext, JDSU, and Finisar as among the companies using Fabrinet, all of which can expect to be affected to some degree. Finisar is perhaps in the best shape, since its use of Fabrinet's Chokchai and Pinehurst facilities is not as extensive as the other companies on Inniss's list.
While the supply of optical communications components and subsystems will take a hit this quarter as a result of the floods, Inniss believes the impact will prove short-lived. He therefore doesn't believe the flooding offers competitors of the affected companies much of a chance to wrest away market share.
"We expect the market to return to capacity by the end of 1Q12," he writes. "Component vendors will use internal manufacturing capacity where products and processes were developed before being outsourced and will use contract manufacturers where they have long-standing relationships and agreements. They can increase capacity by running multiple shifts, but they will be limited by the availability of test equipment."
Inniss believes larger carriers and network equipment manufacturers to be less likely to feel the effects of a prolonged shortage because of their ability to use "parts in the pipeline" to meet their needs. Companies with smaller inventories may feel the pinch if shortages linger, however.