LightCounting: Relax, 2017 optical component and module sales will be just fine

LightCounting has a word for those shaken by recent disappointing quarterly reports from the likes of Acacia, Finisar, NeoPhotonics, and Ciena: "Chill." The market research firm asserts the recent bumps have not caused it to change its forecast for growth in 2017.

The company says the spate of bad news from companies derives from seasonally weak first quarter demand for optical technology in China, what LightCounting described as "a few glitches in production" at Finisar and NeoPhotonics, and lower demand from one customer of Acacia. These events are more isolated incidents rather than signals of a downward trend, in LightCounting's estimation. The market researchers still expect deployments of 100 Gigabit Ethernet (GbE) optics in mega-datacenters to spur market growth in 2017 as the broader market remains steady, as the chart above hints (despite the strategically placed LightCounting logo).

The company says that it expected the optical component and module market to stabilize after a blistering 2016 (see "100 Gigabit Ethernet optical transceiver sales topped $1B in 2016: LightCounting"). Shipments of 100G DWDM ports increased by more than 50% during the year; while the market won't keep up that pace in 2017, LightCounting still expects the segment to climb 30% this year. The prices of those modules, particularly for metro applications, will be lower in 2017. Therefore, 30% growth in port shipments likely will translate to only 5%-10% growth in revenues for equipment suppliers.

LightCounting points out that AT&T and Verizon plan to fund deployments of ROADMs, 100G DWDM, and trials of 400G DWDM technology this year. While Chinese service providers won't report their financials until late this month, LightCounting expects them to maintain investments in optical networks on the same level as in 2016.

Meanwhile, internet content providers (ICPs) spent 25% more in the second half of 2016 than in the second half of 2015. LightCounting expects this uptick to continue, as high-speed optics remains a priority for operators of mega-datacenters. LightCounting expects that these customers will purchase more than 1 million units of 100GbE optics in 2017 – or about the same number as 40GbE transceivers sold in 2015. Shipments of many new 100GbE transceivers will double or triple in 2017, the market research firm predicts. Sales of such legacy products as CFP LR4 are likely to hold steady, LightCounting adds.

LightCounting provides analysis for sales of 100G DWDM, 40GbE, and 100GbE optics in 2014-2016 in its Quarterly sales database, released along with the company's Market Update Report. The database includes historical data on quarterly shipments and pricing of more than 100 products in Ethernet, CWDM/DWDM, SONET/SDH, Fibre Channel, FTTX, wireless fronthaul, EOM, and AOC market segments. The report also presents an analysis of revenue and spending trends of top-tier communications service providers (CSPs) and ICPs and financial results of telecom and datacom equipment vendors, including the market shares of the leading suppliers of 100G DWDM transport equipment.

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