Optical component market to grow 30% in 2003

9 December 2002 -- The optical components market will growth 30% in 2003, says Strategies Unlimited, as inventories are finally depleted and the market begins to see new system orders.

9 December 2002 -- The optical components market will finally see growth again in 2003, with a 30% year-over-year increase in revenues, according to market researchers at Silicon Valley-based consultancy Strategies Unlimited in its report Optical Networking Components - 2003 Market Outlook. The growth will come as inventories are finally depleted and the market begins to see new system orders.

During the recent telecom spending bubble, sales of products for optical telecoms networks rose steadily, only to drop precipitously in 2001-02 as the bubble burst. Optical component manufacturers were affected even more than systems manufacturers, due to the huge inventories of components that had been accumulated during the bubble. By 2003, inventory burn-off will finally be complete, and growth is expected to resume.

"When we reviewed the market situation last April, we predicted that this market would begin turning around by 2003," said Tom Hausken, Optical Components Practice Director at Strategies Unlimited. "Our updated analysis reaffirms this prediction. The market will by no means return to the heyday of 2000 anytime soon. Even with 30% growth, we project component vendors' revenues in 2003 at USD2.1bn, far below the USD9.1bn peak we saw in 2000."

Growth in this sector beyond 2003 will be more sustainable as a humbled industry pursues a more modest set of expectations. In 2004, carrier capital expenditures are expected to rise as new equipment is used to help meet carriers' headcount reduction targets, as well as to fulfill continued growth in customer demand. Delays in new builds have had devastating consequences for suppliers, but equipment upgrades ultimately will be made, leading to gradual relief for the industry.

www.strategies-u.com

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