Recently, LightCounting released the latest issue of market forecasts.
LightCounting noted that the optical communications industry is entering 2020 with a very strong momentum. At the end of 2019, the demand for DWDM, Ethernet, and wireless fronthaul connectivity surged, while in 2020 and 2021, due to the COVID-19 pandemic, people began to shift to working from home and learning, and the demand for faster, more common, and more reliable networks became stronger. While supply chain shortages continue, the industry has been able to overcome these issues to a large extent, with the optical components and modules market achieving strong growth in 2020 and 2021.
LightCounting believes that the optical transceiver market is expected to achieve strong revenue growth again in 2022 (expected to be 17%) after growing by 9% in 2021 and 17% in 2020. Demand for optoelectronic devices is strong in all segments, and continued bottlenecks in the global supply chain may have created some additional demand (over-ordering) and of course moderated the decline in prices, prompting higher-than-expected sales growth in 2021, so we raised our forecast for 2022-2027, as shown in the chart below.
The latest forecast projects a CAGR of 12% for 2022-2027, which is not much different from the 13% CAGR forecast for October 2021. Strong sales of DWDM and Ethernet optical components accounted for most of last year's growth, and these segments are expected to lead growth in 2022-2027. Sales of optical interconnects, mainly active fiber optic cables (AOCs), will also grow at a double-digit (10 percent) CAGR over the next 5 years. Wireless fronthaul is a weak area, with falling prices combined with cyclical declines in unit shipments leading to negative sales growth.
It is worth mentioning that LightCounting has changed some of the rules of market forecasting. In the DWDM space, the number of ports for pluggable optical modules is no longer a separate prediction. In the FTTx space, more comprehensive shipment data (OLT and ONU) are collected. The forecast rules for Ethernet were updated in March 2022 and have not changed since then, a figure higher than the October 2021 forecast due to increased shipments of 400G, 800G and 1.6T products.
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