Ovum: Optical component sales climb 5% in 1Q12

Their customers may not have enjoyed the first three months of this year (see “Ovum: Bad first quarter for optical network hardware sales”), but suppliers of optical components saw revenues climb 5% sequentially in the first quarter of 2012, market research and analysis firm Ovum reports in its newly released Market Share Alert: 1Q12 Global OC.

Jun 28th, 2012

Their customers may not have enjoyed the first three months of this year (see “Ovum: Bad first quarter for optical network hardware sales”), but suppliers of optical components saw revenues climb 5% sequentially in the first quarter of 2012, market research and analysis firm Ovum reports in its newly released Market Share Alert: 1Q12 Global OC.

Of course, the niche started from a point depressed by flooding at the Thailand contract manufacturing facilities of several major suppliers. Ovum says the uptick in 1Q12 was largely due to the resumption of manufacturing capacity to nearly pre-flood levels what it was before the Thai floods. In fact, optical component sales in the quarter trailed year-earlier levels.

“The return of manufacturing capacity is the main contributor to the OC market’s 1Q12 increase,” confirmed Daryl Inniss, practice leader of components at Ovum and author of the market alert. ”Among the top 10 suppliers, Opnext’s 28% gain led the market. North America was a bright spot, with vendors citing strong spending from Verizon and the multi-service operators (MSOs).”

In Asia, sales in Japan grew strongly while China was mixed. For example, sales of 40G devices in China met expectations, while demand for access components was slow – a common occurrence in the first calendar quarter, Ovum notes.

“This uncertainty in China is associated with the lack of visibility and actions that the government might take in order to stimulate growth in the market,” Inniss said.

According to the study, 1Q12 has been the first growth quarter since 1Q11, but macroeconomic uncertainty still plagues vendors, with many citing limited order visibility. Suppliers have responded to these challenges with an increase in consolidation, including transactions between Oclaro and Opnext, Sumitomo and Emcore’s VCSEL business, and Accelink and WTD.

“The long-term outlook for optics will continue to be positive as bandwidth demand continues to grow,” Inniss offered. The announced mergers of various suppliers will improve their capability to deliver highly integrated solutions that are needed for telecom core and enterprise networks and to compete with market leader Finisar.

‘”Ovum sees the market expanding by about another 4 per cent sequentially in 2Q12 and forecasts full-year revenues of $6.9 billion for 2012, for 6% annual growth,” he concluded.

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