May 6, 2020

LightCounting releases an updated Optical Communications Market Forecast.

The optical communications industry entered 2020 with potent momentum. Demand for DWDM, Ethernet, and wireless fronthaul connectivity surged at the end of 2019, leading to shortages in the supply chain. In Q1 2020, the COVID-19 pandemic forced factories to shut-down around the world. Consequently, the stress in the supply chain became elevated to a whole new level. Most component vendors have reported lower than expected revenues for Q1 2020, and guidance given for Q2 was very uncertain. Factories in China reopened in early April, but the majority of the businesses in Malaysia and the Philippines are still closed as this report goes to print in early May 2020. Companies based in Europe and North America are just starting to reopen.

LightCounting’s latest market forecast for sales of optical transceivers, shown in Figure E-1, assumes that our industry will reopen in the second half of the year and suppliers of optical components and modules will return to full capacity by Q4 2020. Demand for optical connectivity in telecom networks and datacenters is even higher now than at the end of 2019. However, some network and datacenter construction projects are currently delayed because of the pandemic. Transceiver suppliers will not be able to meet their original production plans for this year, but steep declines in product prices, which limited market growth in 2018-2019, are likely to moderate in 2020.

Figure E-1: Global sales of optical transceivers 2016-2024 by segment

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As illustrated in Figure E-1, we expect modest growth in sales of optical transceivers in 2020 and a 24% growth in 2021 to satisfy the demand for more bandwidth across many applications. Sales of optics for wireless fronthaul and backhaul will increase by 18% and 92%, respectively, driven by 5G upgrades in China, which remain on target for this year. Sales of FTTx products and AOCs, included in the optical interconnects category in Figure 3-2, will grow by double digits in 2020, also driven by deployments in China. Ethernet and DWDM market segments will return to double-digit growth in 2021 to catch up on the delays of this year.

The report provides a detailed market demand forecast through 2025 for optical components and modules used in Ethernet, Fibre Channel, CWDM/DWDM, wireless infrastructure, FTTx, and high-performance computing (HPC) applications.

Key inputs include an analysis of the business and infrastructure spending of the top 15 service providers and the leading Internet companies and sales data from 2016 to 2019 for more than 30 transceiver vendors, 20 of which shared their confidential sales information with LightCounting. The forecast is based on LightCounting’s proprietary forecast model, which correlates transceiver sales with network traffic growth and the projected deployments of 5G and FTTx systems for broadband access.

More information on the report is available at: http://lightcounting.com/products/Forecast/


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