Sales of Optics to Cloud Companies seem to be largely immune to COVID-19
LIGHTCOUNTING RELEASES AN UPDATED REPORT ON OPTICS FOR MEGA DATACENTERS
Investments by Cloud companies in mega datacenters and their supporting networking infrastructure have created a new and very dynamic segment in the optical components and modules market. LightCounting’s latest report – The 2020 Mega Datacenter Optics Report – offers an in-depth look at the development of this new market from 2016 to 2020, and its potential growth in 2021-2025. The database provided with this report contains detailed sales projections of more than 50 product categories of Ethernet optical transceivers, DWDM optics, Active Optical Cables (AOCs) and Embedded Optical Modules (EOMs), segmented into three main applications: telecom, enterprise and cloud. The Cloud segment includes optics used inside the mega-datacenters of Cloud companies as well as in the interconnecting routes between them (known as the DCI segment).
The figure below summarizes the LightCounting’s sales forecast of optical components and modules to Cloud companies. This market segment grew by more than 50% in 2016 and more than 70% in 2017. However, demand for optics from some of the key cloud customers started to slow down in the second half of 2018. Sharp declines in prices of 100GbE products also contributed to slower revenue growth in 2018 and a decline last year. The Cloud segment increased by “only” 17% in 2018 and it declined by 13% in 2019.
Sales of Optics to the Cloud
The COVID-19 pandemic brought in a new set of disruptions in early 2020. Many projects were delayed, including construction of new datacenters. Facebook postponed planned deployments of 200GbE until 2021, but ongoing deployments of 400GbE at Amazon and Google seem to remain on schedule and the market for Ethernet transceivers as a whole is expected to show modest growth in 2020. Demand for 100GbE optics from Chinese Cloud companies is likely to set a new record this year.
With growing anti-globalization sentiment around the world, we expect that regional and national Cloud companies will take a lead in providing Cloud services. It will take many years for these companies to reach the scale of the leading American and Chinese Cloud giants, which translates to a bit slower growth for sales of optics to the Cloud segment. Emerging AI applications and growth in edge datacenters create additional demand for high speed optics, including AOCs and DWDM connections.
More information on the report is available at: http://lightcounting.com/products/megadatacenter/