Ovum: Optical components market expanded 4% sequentially in 1Q08

JUNE 24, 2008 -- Ovum (search for Ovum) announced its final analysis of first-quarter 2008 results for optical component (OC) vendors. In 1Q08 revenues for the segment were up 4 percent versus 4Q07 and up 12 percent versus the year-ago quarter.

"The inventory correction that weakened the OC industry for much of 2007 has stabilized," said Daryl Inniss, vice president and practice leader, communication components at Ovum. "We see strong demand for new products that support network agility, bandwidth expansion, and lower total transport cost. The battles for emerging services by service providers will continue to fuel spending and expansion of the optical component market."

1Q08 highlights for the optical component market and the top 10 vendors included:

• 1Q08 revenues were 1,178 million, up 4 percent versus 4Q07 and up 12 percent versus 1Q07.
  
• Most OC vendors attributed revenue growth being caused by carrier network expansion and projected growth throughout 2008.
  
• Market leader JDSU posted a 5 percent sequential growth led by ROADMs, tunable lasers and transponders, and agile amplifiers but lost market share on a rolling 4Q basis.
  
• Finisar, the second largest OC company, posted a sequential gain of 9 percent driven by 1- to 8-Gbit/sec LAN/SAN transceivers and its 10- and 40-Gbit/sec transceivers.
  
• Sumitomo declined 1 percent sequentially to $92 million.
  
• Ovum estimated Avago's revenues at $85 million, a 4 percent sequential growth.
  
• Opnext, the fifth largest OC company, posted the strongest quarter-over-quarter growth among the top 10 suppliers at 9 percent. Growth came from 10- and 40-Gbit/sec transceivers and transponders.
  
• Emcore, combined with estimates of Intel's OPD revenues that it recently acquired, posted a 2 percent sequential decline.
  
• Avanex posted a 5 percent sequential decline but reported a stronger than expected gross margin of 32 percent.
  
• Source Photonics, formerly MRV (Luminent), posted a 2 percent sequential decline.
  
• Oplink posted the largest decline among to 10 suppliers of 17 percent. The decline is due, in part, to the discontinuation of some products.
  
• Bookham posted the strongest year over year growth at 39 percent. Its quarterly growth was flat; the company cited strong demand for tunable lasers and transponders.
  

Components and modules supporting 10 Gbits/sec, 40 Gbits/sec, and ROADMs were identified most often by vendors as being responsible for its growth. JDSU and Optium reported running at capacity for ROADMs. Opnext ran at capacity for 40-Gbit/sec transponders. Bookham suggested running at near capacity for tunable lasers and transponders. Expect capacity expansion for these products by these vendors and others as Ovum expects strong demand to continue.

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