Is a new investment cycle starting?

Despite continuing declines in Capex and modest growth in sales of telecom networking equipment, the industry momentum is clearly positive in 2010. Sales of datacom systems picked up promptly in 2010, as businesses restarted upgrade projects delayed by the economic downturn. Very strong demand for optical components and modules is an early indication of the industry-wide recovery.

LightCounting projections for the market growth in 2011–2014 are detailed in the forecast report and database, which are available now. Global sales of transceivers will reach $2.4 billion in 2010, increasing by 16%. Sales of Ethernet and Fiber Channel modules will increase by 17% and 25%, respectively, driven by sales of 8G and 10G SFP+ transceivers. DWDM transceiver sales, lead by 10 Gbps XFP modules, will be up 22% for the year.

Sales of passive optical components, ROADMs, pump lasers and amplifiers are growing well ahead of the total market for components and modules in 2010. This suggests that a new cycle in infrastructure upgrades may be starting now, since these devices are typically used in early stages of network installations.

August 1, 2011

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