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Optical Transceiver Market Trends in 2019 28/8/2019

One thing we can say for sure, world is constantly changing and evolving. If we take a look on Fortune 500 company list in 1955 and in 2016 only 12% of the companies which were on the list in 1955 are still on the same list in 2016. Based on this assumption we could say that 60 years from now in Year 2078 very few of today’s top companies in the world will be on the same list providing same service as they are today. If 60 years ago you would say: world’s largest taxi company will not own any vehicle (Uber), or world’s most popular media owner (Facebook) creates no content or worlds largest accommodation provider (Airbnb) has no real estate or you can monetize on the front pages of newspapers (Twitter), people would probably think you are crazy and take you away. Today these are top companies in our world.optical sfp connector

Time ago developments of railroads where one of the most important phenomena of the Industrial Revolution, they not only provided transportation, but they as well started Transportation Revolution which stimulated mankind to develop other means of transport such as cars, airplanes and subways. Railroads helped to increased population and general life level in universe as it helped to transport food and other goods in efficient manner and helped to populate and expand areas which in other circumstances would not be feasible.

Nowadays telecommunication industry is one of the core building blocks of the digital economy and the digital world with help of which already many amazing things have arrived (Smartphones, Social Networking, Youtube, Skype, Twitter, Voice recognition..) and many amazing things are on their way to come (Artificial Intelligence, Self Driving Cars, Connected devices..). There was some interview with Jeff Bezos (Amazon) where he mention that building Amazon was not so hard as “heavy lifting” was already in place for Amazon..he didn’t had to build transportation network.. it was already there (UPS, TNT, Fedex, DHL…), he didn’t had to build telecommunication network to connect with his customer it was as well there, he didn’t had to build payment system (Credit cards where there) and computers where already on every desk thanks to Microsoft, IBM and Apple. We can consider telecommunications industry as one of “heavy lifting” industries in today’s world which has already played essential role in how we do things today and will as well play important role for how we will do things in future.

If we “zoom-in” more deep one of the core connecting elements in todays telecommunication networks are optical fiber and optical lasers which ensure that telecommunication devices can be effectively and economically interconnected with each other over the short and long distance links. Mass adoption of internet and requirement for video streaming, cloud, social networking and online commerce are boosting factors for optical laser speed development and optical laser market growth. Cisco has predicted that IP traffic will grow at an annual rate of 22% from 2015 to 2020 while consumer internet traffic will grow at the rate of 23% annually and mobile traffic will grow at the rate of 53% annually. Based on these predictions we can assume datacenters and network operators will have a need to increase their capital spendings in network infrastructure including investment in optical lasers.

Sources vary, but it is estimated that global optical transceiver market will grow in Year 2016 to 2022 with CAGR about 13.4% and is estimated that will reach $6.87 billion by Year 2022. Key players in our industry remain Finisar (1.4 billion USD revenue in 2017), Lumentum (1 billion USD revenue in 2017) Broadcom, Sumitomo, Accelink, Oclaro, Acacia, NeoPhotonics and others.

What we can feel in Year 2018 is that more and more customers shift their 1G connections towards 10G in edge of their networks, we as well see that many customers optimize their fiber resource by deploying passive xWDM and going towards 10G CWDM or DWDM network model in their metro and backbone networks. We as well see the increasing demand for 40G QSFP+, 100G QSFP28 in operator and datacenter core. For the 100G there are several competing form factors: CFP/CFP2/CFP4 and QSFP28, here form factor size and market adoption is playing esential role and looks like QSFP28 is going to be main form factor in 100G era. As well the cost for 40G QSFP+ and 100G QSFP28 lasers have gone down significantly as these modules are more adopted and becoming mass market products and with help of that we can expect that even more operators and datacenters will switch their backbone lines to these speeds.

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