Telecom lasers, transponders could see 30% growth this year, thanks to line cards

The telecom laser and transponder market could grow more than 30% in 2003, driven by the continued installation of line cards into existing systems, claims a new report by market researcher Strategies Unlimited (Mountain View, CA). But with dozens of suppliers competing for a share of the pie, prices and margins will remain squeezed for industry participants.

The laser market has fared better than other optical components during the current industry downturn, concludes the report. Laser products are installed into new systems as well as existing systems as new DWDM channels are added. Additionally, average selling prices (ASPs) of lasers generally have scaled upward as the data rate of those lasers increases, since higher-data-rate lasers are expensive to package. ASPs for many passive optical components, by contrast, have risen only modestly with new generations of systems.

Integration of new features into functional blocks, or transponders, provides a higher revenue opportunity for many players in the 10- and 40-Gbit/sec markets. While their overall penetration into the market is limited, these products sell for higher prices and scale well with data rates.

However, the industry remains plagued by inventory buildups that occurred during the initial phase of the industry downturn. As of the end of last year, excess inventories remained for products aimed at the long-haul market, such as continuous wave lasers on the ITU grid, thus depressing sales of laser diodes. Products in the best inventory position are metro transceivers and newer products like coarse WDM lasers.

Despite slow sales, the number of suppliers has swelled to more than 100—far beyond any reasonable value, say analysts. That is clearly excessive, reports Strategies Unlimited, even for a diverse market and allowing for a healthy number of startup companies as candidates for acquisition. So far, there have been few consolidations or closures.

For more details on the report, "Telecom Lasers, Transceivers & Transponders: Market Review and Forecast-2003," call 650-941-3438 or visit

More in Market Research