Recently, light counting, a well-known market research institution of optical communication, said that with the end of the difficult year 2019, we expect that the market of optical communication devices has begun to pick up and will achieve steady growth in 2020.
However, LightCounting believes that at present, many market segments have begun to grow upward. So as we enter 2020, LightCounting gives eight reasons for optimism about the market of optical devices in 2020.
1. In the third quarter of 2019, the expenditure growth of super large data center is positive and on the rise. Historically, spending has been highly cyclical, and the segment appears to be entering a high growth stage in the next cycle. LightCounting expects to spend more in 2020 than in 2019.
2. The negative growth of data communication equipment revenue decreased in the third quarter, and the trend was positive in the fourth quarter. H3C and Inspur, the two companies in this area tracked by LightCounting, achieved revenue growth of 39% and 23% respectively in the third quarter.
3. Revenue in the segment of optical devices is likely to set a new record in the fourth quarter. LightCounting is expected to grow 13% year on year in the second half of 2019 and 19% in 2020.
4. In the third and fourth quarters of 2019, China Mobile, China Telecom, China Unicom, Korea Telecom, SK Telecom, LG Uplus, Verizon, at & T and T-Mobile began to widely deploy commercial 5g. By the second half of 2019, the demand for 10G and 25g gray light and WDM front light modules will increase significantly, and the deployment work will continue for at least another few years. It is expected that the wireless business revenue in 2019 will more than double that in 2018, and the compound annual growth rate will reach more than 20% by 2024.
5. Data shows that the sales volume of DWDM optical module in the second half of the year increased by 11% year on year, and will increase by 7% year on year. The main driver of this growth is the DCI application, which consumes more and more COLORZ and coherent modules. Access network applications also have a strong demand for 10G DWDM.
6. Some market revenue growth is driven by the adoption of newer, faster and more expensive existing products, such as 64 Gbps devices for fibre channel customers and XG-PON rather than GPON for service providers.
7. LightCounting estimates that the optical interconnection application market will grow by 14% in the second half of 2019, and will grow at a compound annual rate of 27% in the next five years. Although the demand for data center interconnection between servers and switches at the top of the rack is the largest, the market is characterized by product and customer diversity, so it is widely used in high-performance computing, core routing / optical transmission, data center interconnection, military / aerospace and industry.
8. Optical devices continue to grow exponentially in sensing applications. Lumentum benefited from its early leadership in the field of 3D VCSEL sensing for smartphones, followed by II-VI. As more and more smartphone manufacturers add facial recognition and AR / VR functions to smartphones, the demand will continue to grow. Automobile lidar is another sensing application field, which is expected to take off in the middle of 2020.
LightCounting points out that as the largest single market segment in transceiver field, Ethernet transceiver market performs flat in 2019, with a decline of 9% in the second half of the year and an overall decline of 16% in the whole year. There are many factors that cause this situation. First, the transition time of one super large-scale enterprise to 100g is longer than expected. Another enterprise's "procurement strategy change" has led to a huge change in the company's prediction of equipment procurement. In addition, infrastructure spending in China and other countries has slowed down. At the same time, the unstable trade relationship between China and the United States There is still uncertainty about how long it will last and to what extent.