LightCounting: Optical transceiver sales decline 5% in Q1 2011

The optical transceiver market took its usual first-quarter hit in 2011 after setting records in the fourth quarter of 2010, says market research and analysis firm LightCounting. Worldwide sales of optical transceivers declined by 5% in the quarter, LightCounting estimates, led by the Fibre Channel and Ethernet market segments.

Fibre Channel module sales dropped 20%, while Ethernet transceiver sales dipped 10%. Sales of SONET/SDH and DWDM interface modules declined slightly as well, despite what LightCounting termed “strong demand” for 40G products. The firm estimates sales of short reach OC-768 transceivers grew 20% in the quarter, while 40G DWDM transponders revenues increased by 30%. Sales of 100 Gigabit Ethernet 100GBase-LR4 modules also were in higher demand, increasing 50% in 1Q11.

Meanwhile, sales of FTTX transceivers and optical interconnects also bucked the overall negative trend and increased in Q1 2011. LightCounting did not indicate the size of the increase.

LightCounting noted that the inventory corrections cited by Finisar, Oclaro, and others in wavelength-selective switches did not carry over significantly to the optical transceiver space. Besides the difficulty in meeting the previous quarter’s record levels, lower product prices introduced on January 1 trimmed Q1 sales as well, LightCounting believes.

Looking forward, supplier guidance for Q2 indicate that sales of Ethernet and Fibre Channel transceivers, which declined the most in Q1, will rebound in the second quarter as demand for 10 Gigabit Ethernet and 8-Gbps SFP+ transceivers remains strong in LightCounting’s estimation. The SONET/SDH segment is likely to be flat, but sales of DWDM modules will probably decline in Q2 2011.

This scenario is consistent with previous market corrections when datacom market segments, such as Fibre Channel and Ethernet, responded much faster to changes in demand than telecom markets, such as SONET/SDH and DWDM, LightCounting counsels.

However, growth in FTTX and optical interconnect markets is very likely to continue in Q2 2011, helping to push the global optical transceiver market back into positive territory, LightCounting concluded.