Optical components market posts weak growth; contraction on cards for Q2

MELBOURNE, AUSTRALIA: Weak growth in the global optical components (OC) market in the first quarter of 2011 marked the start of a period of contraction for the sector, according to Ovum.

In a new market report, the independent telecoms analyst reveals that the OC market grew by just one per cent sequentially in the first quarter of 2011, reaching $1.59 billion. This weak growth is a sure sign that the torrid pace set in 2010 has cooled significantly, says Ovum.

Furthermore, Ovum’s vendor revenue guidance for the second quarter of 2011 shows that the market could contract between two and eight per cent sequentially, an outlook that if realised would mark the first sequential decline in two years.

Karen Liu, Ovum analyst, commented that although the OC market grew by 27 percent in the first quarter of 2011 when compared to the same period last year, the growth had slowed considerably.

She said: “The sequential growth of one per cent is the smallest since the first quarter of 2009, and the year-on-year-growth is the smallest since the last quarter of 2009. This weaker growth is a reflection of the contraction that we believe will come to light in the second quarter of this year.

“These are sure signs that the OC market is slowing when compared to 2010. The market returned to normal stable growth after the global recession, but the picture for the second quarter of 2011 may be cause for concern as it could be a sign that the market is about to recoil.

“In terms of the segments that are causing the slowdown, our analysis shows weakness in ROADMs and filters for the first time in six quarters. Sales of transmission discretes were also down this quarter.

"Meanwhile, vendors such as Finisarhave cited weaker spending in China as a major factor behind the slow sales, confirmed by our analysis of quarterly revenues from the optical networking (ON) market. ON sales in China posted a 20 per cent contraction, which pulled down the whole Asia-Pacific region.”