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Solid results reported by optical component suppliers in Q1 2015 set up high expectations for the year.


LightCounting releases June 2015 Market Update Report and Database


With Finisar Q1 2015 earnings released on June 18th, LightCounting is pleased to present analysis of the industry financial reports and detailed projections for the optical components and modules market in the first half of 2015.

Figure 1 summarizes the Q1 2015 story in numbers, but several important longer term trends are hidden in quarterly fluctuations and currency exchange rates.

Figure 1: Q1 2015 vs. Q1 2014 growth rates across the industry supply chain.

Spending of the top 15 Web2.0 companies (included into LightCounting Internet index and shown as Datacom Capex in Figure 1) was up by almost 30% in Q1 2015, compared to the same quarter of 2014. This is in line with the average growth rate of the last 5 years. No signs of a slowdown here.

Capex of the top 15 Service providers (Telecom Capex in Figure 1) declined by 3% in Q1 2015 - well below of the five year average of 5% gains. The strong U.S. dollar takes part of the blame for this decline. Quarterly fluctuation is another part of this story. Our analysis projects that the Capex will end the year with about 5% gain due to several encouraging developments in the China, India and the US.

The annual Capex of top 15 service providers should reach close to or even exceed $200B in 2015, while the top 15 Web2.0 companies are projected to spend close to $50 billion this year.

Telecom equipment sales were flat in Q1 2015, but the total number hides increases in sales of Chinese OEMs and declines of European suppliers, at least in terms of U.S. dollars. Most of the European suppliers reported increasing sales in Euros, but it was not enough to offset the strength of the U.S. dollar.

Datacom equipment sales were up 4% in the first quarter of 2015, at least temporarily reversing a longer term decline. Cisco was the only major supplier reporting slightly higher revenues on sequential and year-to-year basis. Arista Networks and Mellanox posted very strong growth in the first quarter, solidifying gains made in 2014.

Sales reported by publicly traded optical component and module vendors were up 7.5% in Q1 2015, with three of the top five vendors (including Accelink, Avago, and Finisar) reporting sequential and year-to-year gains. Accelink benefited from the second wave of strong demand for FTTx optics in early 2015. Avago attributed increasing revenues to sales of 40GbE optics. Finisar’s results indicated steady performance across a wide range of products with an additional boost from an extra week in their last fiscal quarter.

Additional data collected by LightCounting indicates that sales of optical transceivers increased faster that the total optical components market in Q1 2015. Telecom transceiver sales were up by 9% in Q1 2015 compared to Q1 2014, lead by strong demand for FTTx modules. Datacom transceiver sales increase by 19% over the same period, benefiting from a steady ramp in sales of 10GbE and 40GbE modules. Expectations for volume shipments of 100GbE transceivers to Web2.0 customers in late 2015 remain high, as many vendors complete product qualifications.

The total sales of optical transceivers increased by 14% in Q1 2015 compared to the first quarter of 2014 - well ahead of the results reported by publicly traded companies. This suggests that privately held vendors are growing faster. The latest SEC filings of Innolight offer an illustration of this trend.

Detailed analysis of sales of the optical components and modules is included in the June 2015 Market Update Report and Database, offering a snapshot of optical transceiver growth trends, backed up with detailed quarter-by-quarter sales data collected via LightCounting's proprietary vendor survey. Revenue and spending trends of top-tier telecom and internet service providers, and financial results of network and datacom equipment vendors are also included to provide an understanding of what drives sales trends at the transceiver level.

The report consists of approximately 50 PowerPoint slides with many charts and tables suitable for reuse in client presentations. An Excel spreadsheet is also included with the report, providing the latest 6 quarters of shipments, prices, and revenues for ~100 products spanning the Ethernet, Fibre Channel, WDM, SONET/SDH, Wireless, and FTTH segments. Quarterly revenue and spending data for 34 service providers plus revenues for 22 equipment makers is also included, as are publicly reported revenues of 14 leading optical components vendors.

The following vendors shared confidential sales data with LightCounting for this report: Acacia, Accelink, Applied Optoelectronics, Avago, Coadna, Delta, Eoptolink, Finisar, Fujitsu, HG-Genuine, Hisense, Hitachi Cable, Innolight, JDS Uniphase, NEC, NeoPhotonics, Oclaro, OE Solutions, Source Photonics, Sumitomo, Superxone, and TE Connectivity.

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ABOUT LIGHTCOUNTING MARKET RESEARCH
LightCounting is a leading optical communications market research company, offering semiannual market updates, forecasts, and state-of-the-industry reports based on its analysis of primary research with dozens of leading module, component, and system vendors as well as service providers and other users. LightCounting is the optical communications market’s first choice source for the accurate, detailed, and relevant information necessary for doing business in today’s highly competitive environment. For more information, visit: www.LightCounting.com or follow us on Twitter at @LightCounting.