Global sales of optical interface modules used in telecom and datacom networks exceeded $2.5 billion in 2010, increasing by 30% from the year before. The growth was driven by sales of 10 Gbps SFP+ and DWDM modules, including 40 Gbps and even 100 Gbps products. Sales of WSS modules used in ROADMs and tunable lasers were also strong in 2010, growing at 34% and 14%, respectively. It was a slow year, however, for active optical cables, as demand for these modules is closely tied to individual installations of supercomputer clusters and this market remains volatile. Detailed analysis of the optical communications market, based on confidential sales data provided by 23 leading vendors, is presented in a new LightCounting Market Update report released on January 24, 2011: (Market Update Report).
Recovery in the datacom market started in the second half of 2009, with sales of Ethernet and Fiber Channel transceivers increasing rapidly, at 10—30% per quarter. Growth in sales of these products slowed in Q2 2010, but gained momentum again in the second half of the year. Sales of new products such as 10 GigE and 8 Gbps transceivers increased by almost 60% in 2010, with short reach SFP+ modules accounting for most of this growth.
The market for enterprise and storage networking equipment grew by about 20% in 2010, which is significantly lower than the 30%—35% increase in sales of Ethernet and Fibre Channel modules. This market dynamic is consistent with our previously released forecast for this market (September 2010 Market Forecast Report), as optical transceivers gain a larger share of 10 GigE interconnects in datacenters.The emergence of 10GBASE-T as an alternative to SFP+ optics will start impacting the market in 2011-2014, limiting the opportunity for optical transceivers, as discussed in our latest report on 10GBASE-T.
The growth in sales of SONET/SDH and DWDM modules was more modest in the early stages of the recovery, but it gained strength in the second half of 2010. The DWDM market segment posted close to 40% growth for the year, driven by rapidly increasing sales of fixed wavelength and tunable 10 Gbps XFP transceivers and 40 Gbps DPSK and DQPSK modules. Sales of SONET/SDH transceivers increased by almost 30% in 2010, mostly due to growth in sales of short reach OC-768 modules, which jumped by a staggering 160%, and suppliers can barely keep up with the strong demand.
The market for telecom networking equipment showed very modest growth of around 5% in 2010, but it is likely to accelerate in 2011 judging from the rapidly increasing demand for components used in these systems. Sales of components, such as ROADMs and pump lasers, used in the initial stages of new network builds were increasing fast in the first half of the year, and LightCounting expected sales of interface modules to pick up as these network upgrades progress—this is clearly happening now. This accelerating recovery in the telecom market is in line with the latest forecast report released by LightCounting in September 2010. (September 2010 Market Forecast Report.)