LightCounting: Early 2012 sales weakness for optical components and modules not likely to continue

While revenues for Q1 2012 may not have pleased some suppliers of optical components and modules, a solid recovery in both telecom and datacom market segments is likely to start in the second quarter and continue through the rest of 2012. So says market research and consulting firm LightCounting in its newly released “Market Update Report.”

LightCounting’s new report, released this week, includes sales data on more than 100 product categories covering the period from Q1 2010 to Q4 2011 for SONET/SDH, Ethernet, Fibre Channel, CWDM, DWDM, and FTTx transceivers. It also contains guidance for 2012 and potential changes to LightCounting’s market forecast published in December 2011.

The report authors point to 2011 as instructive for those pondering 2012. Sales of optical components and modules increased by 9% last year after growing 36% in 2010. But 2011 also got off to a shaky start, leading some investors to fear a market bubble, according to LightCounting. However, sales of many products remained strong in 2011, pulling the overall market into positive territory.

Similarly, LightCounting calls for the supply chain to “rebalance itself” in 2012. The company’s research, combined with guidance from component suppliers and system vendors, suggests that numerous network upgrade projects continue worldwide, and the industry is well positioned for a “very good year in 2012.”

Even minor improvements in the macroeconomic situation may have a significant impact on the rate of upgrades to networking infrastructure, LightCounting believes. Businesses and service providers tend to invest more in early stages of economic recoveries in anticipation of higher revenues during the boom years, the firm asserts.

Reviewing 2011 trends, sales of optical components and modules for telecom applications increased by 11%, with FTTx and WDM transceiver spending leading the way. Sales of SONET/SDH interface modules declined by 1% because of weak sales of 40-Gbps short-reach modules; LightCounting says it found this blip surprising. The Ethernet transceiver market gained 8% in 2011, while sales of Fibre Channel modules declined by 10%.

LightCounting lists the following as the most interesting developments in the optical components and modules market for 2011:

• Sales of 10-Gbps and 40-Gbps DWDM modules increased by 7% and 73% for the year, respectively, despite disruptions caused by flooding in Thailand.
• Sales of GPON modules jumped by 45%, exceeding $250 million in 2011, driven by strong demand in China. Suppliers also reported the first volume shipments of 10G PON products.
• Shipments of 10-Gigabit Ethernet (GbE) SFP+ transceivers continue to ramp, with more than 4 million units shipped in 2011.
• Sales of 40GbE and 100GbE modules increased by almost 300% in 2011 and are projected to account for 10% of the total Ethernet transceiver market in 2012.
• Deployments of 16G Fibre Channel interfaces started strong in late 2011 and continued in early 2012.
  

For more information on optical components and suppliers, visit the Lightwave Buyers Guide.