Is optical communications recession-proof?

Oct. 21, 2022

It’s approaching fall here in New England – but the weather has a ways to go before it gets as cool as the economy. Inflation, shortages, drought, and other factors have most economists predicting an imminent recession. In fact, the only matter of debate right now is whether a recession has already arrived.

Yet the optical communications sector may prove oblivious to the economic chill. That’s because the two main engines of growth this year – cloud data centers and broadband networking – look as if they will continue to churn despite the anticipated macroeconomic slowdown. Massive government funding projects should enable the broadband network segment to continue its current momentum. Meanwhile, despite some layoffs among the ICPs and tech giants, hyperscalers haven’t eased off their new build plans so far. One can see how the two markets would feed off each other’s energy; the more broadband subscribers, the greater the demand for ICP services. And the more consumers desire those ICP services, the more quickly broadband capacity increases and availability will become more necessary.

In some ways, the component and material supply shortages the industry has experienced may have provided a hedge against an economic downturn. Many fiber-optic technology suppliers report healthy backlogs. As one market analyst put it, a mild recession might only bring technology supply closer to demand more quickly than current projections.

Of course, it’s wrong to believe that a recession – particularly a prolonged one – won’t slow optical communications technology sales at all. But a framework is in place that might make companies in this space a bit better positioned to weather an economic winter than most.


Pull Quote:
As one market analyst put it, a mild recession might only bring technology supply closer to demand more quickly than current projections.
 

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About the Author

Stephen Hardy | Editorial Director and Associate Publisher, Lightwave

Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.

Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.

He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.

You can connect with Stephen on LinkedIn as well as Twitter.

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