LightCounting says that sales of optical transceivers and components will turn around later this year after a slow start in the first quarter. The market research firm states in its most recent Quarterly Market Update that its analysts expect overall year-to-year growth of 9% in 2020.
Revenues for 1Q20 declined 12% sequentially, albeit coming after a new high in the fourth quarter of 2019. The impact of the coronavirus on China, particularly in terms of factory and construction shutdowns, depressed the overall optical transceiver and component market. LightCounting notes that such effects have now rolled into the West and will affect second quarter – and likely third quarter – sales as well. The market research firm notes that vendor year-over-year guidance for the second quarter was all over the map, ranging from double-digit increase to similarly large declines.
However, every company LightCounting analysts track, except Lumentum, stated they expected sequential growth. LightCounting has confidence they will prove to be right, thanks to continued strong spending by the internet content provider (ICP) space. The firm’s most recent data shows that hyperscaler cloud revenues continue to grow faster than other business segments and operate at higher profit margins. So ICPs would be “extremely foolish” if they were to hamper there opportunities in this area by cutting back on infrastructure spends.
As the year progresses, LightCounting expects optical transceivers sales to rise thanks to double-digit growth in the sale of wireless transceivers and optical interconnects, as well as modest growth in Ethernet application sales. Demand for CWDM/DWDM, FTTx, and Fibre Channel devices will remain basically flat for the year, LightCounting predicts. LightCounting has expressed similar optimism, despite the pandemic, in earlier reports (see "Pandemic or not, optical transceiver sales will still grow in 2020: LightCounting").
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