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(2) Global Optical Module Sales Analysis

- Nov 11, 2018 -

However, cloud networks and large data center operators should continue to be a strong source of revenue for optical modules. Demand for 100 Gigabit Ethernet (GbE) modules remains strong (although prices have fallen), while some operators have begun deploying higher speed devices. For example, Google has begun to introduce 2*200GbE optical modules, and it is estimated that deployment will continue next year. Overall, LightCounting predicts that cloud operators' demand for 200GbE, 2*200GbE and 400GbE optical modules will increase from $2.3 billion in 2018 to more than $6.8 billion in 2023. The market research firm pointed out that Broadcom's announcement of a large-scale production of Tomahawk 3 Ethernet switches will also help drive this trend.

There are of course other potential growth areas. The demand for optical modules such as FTTx, wireless networks and optical interconnects is also strong. Applications such as 5G should drive demand for 25G and WDM pre-transmission optics; in fact, sales of such devices have begun to increase this year. In general, WDM is a growth application, and LightCounting said it has increased its sales forecast for CWDM and DWDM modules from 2019 to 20123, in part because shipments of 10G CWDM optical modules have exceeded expectations this year. At the same time, volume shipments of 600G DWDM modules will begin early next year.

LightCounting sees the improvement of the WDM market as a new round of DWDM system upgrade cycle. LightCounting noted that strong sales of pump lasers in fiber amplifier applications since the second half of 2017 is evidence of this potential event. So far, the surge in sales of wavelength selective switch (WSS) modules is another sign of market recovery.

Overall, all of the above factors are sufficient to show that sales of optical modules will begin to return to the next year.

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