MEMS gaining momentum in optical networking

Aug. 29, 2001--Despite the recent market downturn, Micro Electro Mechanical Systems technology remains an oasis within the telecommunications industry.

Despite the recent market downturn, MEMS (Micro-Electro-Mechanical Systems) technology remains an oasis within the telecommunications industry, according to Cahners In-Stat Group. MEMS will play a key role in providing the advanced components needed to get the most out of telecom carriers' fiber optic cable investments. As a result, sales of MEMS for use in optical networking will rise from $67 million in 2001 to $2.3 billion in 2005.

"Although we've seen layoffs, funding mishaps, and scaled-back business plans among some MEMS manufacturers targeting the optical networking segment, MEMS as a whole has not been impacted as significantly as the greater telecom market," says Marlene Bourne, a Senior Analyst with In-Stat. In fact, venture capitalists (VCs) are still providing significant levels of equity to MEMS firms, customers continue to be enthusiastic in their evaluations, and more companies are moving toward production ramp-up. "More significantly, new applications for MEMS in optical networking have come to the fore," says Bourne. MEMS-based variable optical attenuators, tunable filters, and tunable lasers have expanded the market beyond switches, providing additional revenue streams within the telecom sector. Market movement is expected to begin in the fourth quarter of 2001, with increased momentum in early 2002.

In-Stat has also found that while the primary focus of MEMS components continues to be the backbone and the Metro Area Network, companies are now beginning to take a look at the Local Area Network. Although the telecom market won't boom like it did for the past several years, smaller segments such as the MAN will experience rapid growth, with MEMS solutions being a significant factor. VCs have provided more money to MEMS companies in the first half of 2001 than they did during all of 2000.

The report, "MEMS and Optical Networks: Oasis or Mirage," examines the changes that have occurred over the past year in regard to the use of MEMS in optical networking. It analyzes the current telecom slowdown and its impact on MEMS development and compares the increasingly diverse array of solutions and discusses how and when we can expect this market to really take off. The report includes profiles of key players, and forecasts product unit sales and revenues through 2005.

About Cahners In-Stat Group:

Cahners In-Stat Group covers digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions. For more information, visit www.instat.com.

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