SOURCE: LightCounting


April 26, 2016 09:00 ET

Sales of Optical Components and Modules for Network Applications Will Reach $10 Billion by 2021, Despite Declines in Infrastructure Spending

EUGENE, OR--(Marketwired - April 26, 2016) -  LightCounting releases its Optical Communications Market Forecast Report, projecting for 18% growth in sales of optical components and modules in 2016 and 12% CAGR in 2016-2021.

Demand for optical connectivity remained strong in 2015, despite a declining capex of telecom network operators and lower than expected growth in infrastructure spending by the cloud companies. Optics takes on a larger share of the connectivity as data rates go up. Increasing complexity of high-speed optics translates to higher product pricing, boosting revenues of suppliers, while offering cost reductions to end users in terms of dollars per Gigabit of bandwidth.

The spending of the 15 leading network operators is set to drop in 2016. The operators' guidance on their 4Q15 earnings calls means the Far East will spend less in 2016 and in the case of the Chinese operators, significantly less. LightCounting forecasts that capex will be down 7% to $178 billion dollars in 2016.

LightCounting estimates that its Internet (Cloud) Index companies will spend between $43 and $48 billion on servers, networks, and other infrastructure in 2016, up slightly from $42.6 billion in 2015. The low end of the range assumes that the spending to revenue ratio of 6.7%, seen in 4Q15, persists for all of 2016. The high end of the range assumes the 2H15 slowdown was an anomaly, and that spending grows at 15% in 2016, at the same rate that we expect revenues to grow.

Excluding the FTTx and wireless segments, the global optical transceiver market was up 11% in 2015, averaging 9% CAGR in 2010-2015. LightCounting projects for 18% growth in 2016 and 12% CAGR in 2016-2021 for sales of the optics used in Ethernet, Fibre Channel, CWDM/DWDM, SONET/SDH and AOC/EOM applications.

Sales of the FTTx and wireless optics are strongly impacted by demand for these products in China and tend to fluctuate wildly. Sales of FTTx transceivers and BOSAs were up by a staggering 58%, compensating for an 18% drop in sales of wireless fronthaul optics in 2015. These segments are expected to contribute about $2 billion to the total market in 2021, but annual fluctuations are likely to continue.

"This forecast hinges on the adoption rates of several new technologies" -- commented Dr. Vladimir G. Kozlov -- Founder and CEO of LightCounting Market Research. "100G Ethernet and DWDM optics, flex-grid WSS modules and 10G PON transceivers are some of the key products to watch in 2016."

For more information on the report, please click here.

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