LightCounting: Stand by for optical transceiver growth

LightCounting predicts that sales of optical transceivers will exceed $3 billion in 2011, an increase of about 10%. The market research firm believes that the optical communications market will overcome near-term uncertainty and is well positioned for continued growth in 2011-2015.

LightCounting predicts that sales of optical transceivers will exceed $3 billion in 2011, an increase of about 10%. The market research firm believes that the optical communications market will overcome near-term uncertainty and is well positioned for continued growth in 2011-2015.

Very strong demand for the optical components and modules used in datacom and telecom networks indicates an industry-wide recovery from the effects of the macro-economic downturn of 2009, in LightCounting’s view. Sales reported by several suppliers in the fourth quarter of 2010 exceeded LightCounting’s previous estimates. Overall, sales of optical transceivers grew 35% in 2010. While 2011 figures shouldn’t reach this high, there is enough momentum to sustain 10% growth this year, the company believes.

LightCounting reports that sales of passive optical components, ROADMs, pump lasers, and amplifiers increased well ahead of the total market for components and modules in 2010. This factor suggests to LightCounting that a new cycle in infrastructure upgrades may be underway, since these devices are typically used in early stages of network installations. (Ovum recently offered the same opinion – see “Ovum: Optical component sales grew 35% in 2010”).

For example, sales of the wavelength-selective switch (WSS) modules used in ROADMs jumped by 47% in 2010. LightCounting acknowledges that part of this sales increase derived from shortages in components that forced equipment manufacturers to establish inventory reserves, temporarily boosting component sales. Some suppliers have recently indicated that Q1 2011 sales and bookings for the second quarter have slowed as customers work through this excess inventory (see “How long will the optical communications correction last?”).

“We have seen growth rates for the optical networking equipment market lag behind the sharp increases in components sales we observed over the last 18 months,” commented David Krozier, industry analyst at LightCounting. “We expect that equipment sales will accelerate in 2011, so the slowdown in component sales should not last for more than a quarter or two to balance the supply chain.”

“Despite a slow start in 2011, the industry is resuming steady growth that was interrupted by the economic recession of 2008-2009,” commented Vladimir Kozlov, founder and CEO of LightCounting. “Optical connectivity becomes essential across a wider range of networks including data centers, enterprise, and even wireless infrastructure as data transmission rates reach 10 Gbps. This technological transition will drive the industry growth for many years to come.”

LightCounting says that demand for 40-Gbps components and modules remained strong in early 2011, indicating that upgrades in core networks are continuing. The company added that it is “very likely” that 100-Gbps technology shipments will grow sharply in 2011 as well.

Deployments of 10-Gigabit Ethernet optical interfaces in data centers will account for the bulk of datacom transceiver sales in 2011.

The forecast report provides analysis of infrastructure upgrades at the top ten network operators, a summary of trends in the networking equipment market, and analysis of the forecast for optical components and modules. The forecast database includes historical data from 2007 to 2010 and a market forecast through 2015 for optical components and modules used in Ethernet, Fibre Channel, SONET/SDH, CWDM/DWDM, wireless infrastructure, FTTX, and high performance computing applications.

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