Global Optical Communications Market Analysis – Q4 2022 Report

Overview of the Revenue Performance of the Upstream and Downstream of the Industry Chain

Internet Companies: The annual growth rate of revenue in 2022 will be 7.4%, which is a sharp slowdown compared to the growth rate of more than 20% in 2021. Due to the impact of regulatory and macroeconomic changes, large Internet companies’ retail, entertainment, and advertising revenue are all slowing down. According to the analysis, the era of the Internet to make money with the help of platforms or traffic advantages has passed, and the giants are saying goodbye to the era of high growth. At the same time, hard-core technology fields such as cloud computing and chips are becoming the giants’ focus.

Telecom Operators: The revenue of China’s three major operators increased by nearly 10%. In contrast, the decline in revenue of North American operators (due to the divestiture of AT&T’s video business) dragged down the sector’s overall performance.

Equipment Manufacturers: Maintain single-digit growth and strong market demand, but the shortage of components and other supplies limits the revenue growth of equipment manufacturers. Huawei’s revenue performance in 2022 is expected to be flat.

Device Manufacturers: The market demand is very strong, but the supply of chips has been in short supply, which has affected the revenue performance of foreign device manufacturers. According to ICC statistics, in 2022, the negative impact of supply constraints on the revenue of Coherent (i.e., II-VI) and Lumentum will total more than $600 million. If it is not affected by supply constraints, the revenue growth of foreign component manufacturers will exceed 20%.

Chip Manufacturers: Due to rising inflation and weak demand in the terminal market, the revenue growth rate of chip manufacturers will gradually slow down in the second half of 2022, and the revenue of some chip manufacturers will shrink year-on-year.

Optical Fiber and Cable Suppliers: Driven by the construction of network infrastructure in Europe, America, and other regions, the market demand is stronger than expected. The exchange rate has a positive impact on the exports of Japanese suppliers. Material and logistics costs have risen, and optical fiber and cable manufacturers have raised product prices.

Chapter 1  Analysis of the Status Quo of the Global Operating Market

1.1 Development of 5G and FTTH Users

1.2 Global and Chinese 5G Network Investment and Deployment Status

1.3 Investment and Construction of Global and Chinese Data Centers

2.4 Other Important Investment Trends of Service Providers

In 2022, the Number of Global 5G Subscriptions Will Reach 1 Billion, and Fixed Broadband Connections Will Reach 1.45 Billion

5G Contract Number Forecast: By the end of 2022, the number of 5G contracts is expected to reach 1 billion, with an annual increase of 502 million. It is estimated that the number of 5G subscriptions will exceed 5 billion in 2028, accounting for 55% of all mobile subscriptions, and the CAGR will be 30% between 2022 and 2028. North America will have the highest 5G penetration rate at 91%, followed by Western Europe at 88%.

The Reason for the Faster Development of 5G: Compared with 4G, launched in 2009, the growth rate of 5G subscriptions is faster. It is estimated that 5G will reach 1 billion subscriptions two years earlier than 4G. The key factors include that many mobile phone manufacturers have launched various 5G models promptly, and the price has fallen faster than 4G mobile phones. In addition, China has already deployed 5G on a large scale in advance.

FWA is Growing Strongly: it is expected to reach 300 million in 2028, and nearly 80% of these connections will use 5G networks.

Fixed Broadband Connections: It is expected to reach 1.45 billion by the end of 2022, with an annual increase of 90 million; it is estimated that by the end of 2028, global fixed broadband connections will reach 1.8 billion, with a CAGR of 4% between 2022 and 2028.

Global 5G and 5G SA Investment and Commercial Situation

The Report Released by GSA on January 11, 2023, Shows (As of the End of December 2022):

– 5G investment: 515 operators in 155 countries worldwide are investing in 5G. Among them, 148 are in the Americas, 115 are in the Asia Pacific, and 252 are in EMEA.

– 5G commercial: 243 operators in 96 countries have commercialized 3GPP-compliant 5G services (mobile or fixed wireless access). Among them, 39 are in the Americas, 56 are in the Asia Pacific, and 135 are in EMEA.

– 112 operators are investing in public standalone 5G in evaluation, testing, pilot, planning, deployment, or already commercial models.

– 35 of these operators have deployed or commercialized standalone 5G in public networks.

1.068 Billion 5G Package Users in China, 87.07 Million Gigabit Fixed Users

• 5G Package Users: As of November 2022, the three major operators have a total of 1.068 billion 5G package users, an increase of nearly 338 million compared to the end of 2021. China Mobile accounted for 55.8%, China Telecom accounted for 24.6%, and China Unicom accounted for 19.6%.
• Wired Broadband Users: As of November 2022, my country’s FTTH/O users are close to 557 million, an increase of about 51.23 million compared with the end of 2021. 1000M fixed broadband users reached 87.07 million, an increase of 52.51 million compared with the end of 2021, and the number of gigabit users continued to expand.

China’s 5G Base Station Construction Accelerates, FTTH/O Port Addition Slows Down

862,000 5G Base Stations have been Built from January to November: According to data from the Ministry of Industry and Information Technology, as of the end of November 2022, the total number of 5G base stations has reached 2.287 million stations, accounting for 21.1% of the total number of mobile base stations. Among them, 862,000 new 5G base stations were built from January to November, and 650,000 new stations were built in 2021. Judging from the number of new constructions per month, the pace of construction slowed significantly in the fourth quarter.

59 million New FTTH/O Ports were Added from January to November: By the end of November 2022, the total number of FTTH/O ports reached 1.019 billion, an increase of 59 million compared to the end of 2021. Compared with the number of newly added FTTH/O ports (80.17 million) in 2021, the growth rate of FTTH/O ports in 2022 will slow down.

Othe Investment Trends of Service Providers in 4Q22

Fiber Broadband Deployment Planning

* Comcast plans to start providing multi-gigabit symmetrical services supporting 10G in 2023

* Verizon builds more high-speed fiber optic internet in Massachusetts

* AT&T intends to establish a fiber optic network joint venture

* Delaware County, Indiana, plans to deploy AT&T fiber to nearly 1,250 locations

* Surf Internet launches multi-gig fiber optic interconnection service in Indiana

* Visionary invests US$100 million to build a fiber optic network in the west of Rocky Mountain

* T-Mobile intends to invest 4 billion US dollars in joining the fiber optic construction boom

* Google Fiber will expand the FTTP network in Omaha

* Google Fiber will launch 5-Gig and 8-Gig speeds in early 2023

* Tiger Infrastructure invests £75 million in broadband service provider

* Frontier invests $800 million to expand fiber optic network in Connecticut

* Cable One invests $50 million in Ziply Fiber

* Lumen’s ultra-high-speed fiber optic business expands across the United States

* Lumen invests in expanding US intercity network by 6 million fiber miles

* Telenor received $1 billion in fiber optic financing from KKR

* Vodafone will provide fiber optic broadband to 7 million households in Germany

* Vodafone and Altice invested 7 billion euros in building a German optical fiber joint venture

* Australia’s NBN received another US$1.5 billion for the construction of full fiber optics

* New Zealand’s goal: to achieve 100% fiber optic utilization in 2032

* The US NTIA allocated new funds of 601.6 million US dollars to expand the deployment of high-speed Internet networks

5G Wireless and Other Deployment Planning

* Dish issues $2 billion in bonds to help expand wireless business

* US Cellular expands 5G coverage

* KDDI allocates $339 million to upgrade the network in response to the July network crash

* Kazakhstan plans to launch the 5G network in 20 cities

* Zayo adds new infrastructure in major international border cities

* Zayo announces 22 new long-distance dark fiber, 400G, and trans-Pacific submarine lines

* Virgin Media Commercial Wholesale launched a new national high-capacity service core network

* EU plans to send data centers into space

* Equinix enters Malaysia with 40 million USD data center investment

* Huawei plans to invest 150 million euros in opening the first European cloud center

* Google: plans to invest 4.9 billion yuan in Japan within 4 years and set up the first data center in 2023

Chapter 3  Analysis of the Status Quo of the Global System Equipment Market

3.1 Global Telecom Equipment Market Performance

3.2 Mainstream Equipment Vendors: Strong Demand and Ease of Tight Supply

3.3 Relief of Tight Supply Q322 Gross Profit Margin of Equipment Manufacturers Increased Month-on-month

3.4 Net Profit of Most Equipment Manufacturers in Q322 Increased Month-on-month

3.5 The North American and European Markets Continued to Perform Strongly, While the Asia Pacific Performed Relatively Flat

3.6 Huawei’s Revenue Decline has Stopped, and ZTE’s Revenue is Expected to Increase by 10% Annually

3.7 Other Developments of Q422 Equipment Vendors

Global Telecom Equipment Market Performance

Optical Transmission Equipment: In the third quarter of 2022, the global optical transmission equipment market will drop by 6%. Supply issues continue to limit market growth, while a strengthening dollar also impacts market revenues. The decline in market revenue was primarily due to the lack of supply of components needed to produce finished products. North America maintained a small increase, while Europe experienced the largest decline.

PON Equipment: In the third quarter of 2022, global PON OLT equipment revenue broke the record of US$1.3 billion in the previous quarter; global XGS-PON ONT shipments reached 1.5 million units, which was the second consecutive quarter exceeding 1 million units. Service provider investment in new fiber optic broadband networks and equipment continues to grow due to a strongly competitive environment and ongoing government subsidies.

Data Center Switches: In the third quarter of 2022, the sales of global data center switches increased by nearly 20% year-on-year, reaching a historical high in the third quarter and the first three quarters. The shipments of 200Gbps and 400Gbps ports are close to 2 million, accounting for more than 10% of the total data center switch port shipments, and the revenue accounts for more than 20% of the overall market. The supplied environment continues to improve, and more orders are finally being fulfilled. Looking ahead to 2023, despite the likely deteriorating macroeconomic conditions,

But a large backlog starting in 2022, accelerated adoption of 200/400Gbps, and continued strong demand from hyperscalers will drive the market to steady growth again.

RAN Equipment: In the third quarter of 2022, the global 2G-5G RAN market declined year-on-year for the second consecutive quarter. After four years of rapid growth, the RAN market is entering a new stage. Dell’Oro lowered its short-term outlook for the market due to weaker-than-expected performance in the third quarter of 2022. Currently, the analyst firm expects global RAN revenues to decline in the low single digits in 2023 due to surging RAN investment in India and more challenging year-on-year performance in China, Europe, and North America.

Mobile Core Network: In the third quarter of 2022, the global mobile core network and multi-access edge computing market revenue declined again year-on-year. The growth of 5G SA is not enough to offset the decline of the 4G MCN and IMS core market.

Open RAN: In the third quarter of 2022, Open RAN revenue more than doubled year-on-year, and its performance exceeded expectations again. More than 80% of the growth was driven by North America. Open RAN is expected to account for 6% to 10% of the RAN market by 2023. However, the growth rate of Open RAN is expected to slow down next year.

Microwave Transmission Equipment: In the third quarter of 2022, the global demand for microwave transmission equipment continued to grow year-on-year. Wireless transceiver (Radio transceiver) shipments increased by 7% year-on-year, and this growth rate is expected to continue.

Mainstream Equipment Manufacturers: Strong Demand and Tight Supply Eased

Overall performance: According to analysts and company financial estimates, in 2022, the total revenue of seven major foreign-listed equipment manufacturers will be close to US$115.1 billion, a slight increase of 0.5% year-on-year. Equipment manufacturers said the demand continued to be strong, there was a large backlog, and the supply shortage eased in the year’s second half.

1. Cisco: Performance and forecasts have exceeded analyst expectations; business transformation continues to progress. There is a large backlog, and the supply situation is easing.

2. Ericsson: Operators in developed markets such as North America will adjust inventory levels in 2023 as supply chain constraints ease. But in 2024 and beyond, the company expects the market for wireless devices to remain stable.

3. Nokia: While growing macro and geopolitical uncertainty may impact capital spending for some customers, Nokia expects its market to grow on a constant currency basis in 2023. 

4. Juniper: Strong demand and backlog, steps taken to secure more supply.

6. Ciena: Exceeded expectations. Ciena said the results reflected improvements in the supply chain in the second half of the fiscal fourth quarter (Q322), including higher-than-expected receipts of integrated circuits from certain suppliers and higher-than-anticipated purchases of components on the open market. The initial expectations.
7. Infinera: Performance exceeded expectations, ICE6 revenue hit a new high, supply chain challenges continued, and costs rose.
8. ADVA: The market is in the middle of an investment cycle for fiber-based secure digital communications infrastructure, with companies maintaining record revenues and full orders and looking for solutions to maintain or expand delivery capacity. There are still challenges, such as tight supply, rising energy costs, inflation, and sharp fluctuations in exchange rates.

Supply Tension Eased Q322 Equipment Manufacturers’ Gross Profit Margin Rose Month-on-Month

1. In Q322, the average gross profit margin of the seven major listed equipment manufacturers was 44.5%, an increase of 1.52 percentage points from the previous quarter and a decrease of 1.05 percentage points from the same period last year.
2. Among the 7 companies, from Q115 to Q322, only Cisco has an average gross profit rate higher than 60%, and Juniper has dropped to 59.6%; Ciena is between 40% and 50%, and the remaining 4 companies are between 30% and 40% %between.
3. Judging from the analysis of the financial reports of equipment manufacturers, the increase in supply chain costs continues to put pressure on gross profit margins; however, the relief of supply chain tension and the increase in revenue brought about by strong demand has led to an improvement in overall performance quarter-on-quarter.

Q322 Net Profit of Most Equipment Manufacturers Increased Month-on-Month

In the third quarter of 2022, Infinera’s losses narrowed, and the remaining six companies remained profitable. Although procurement costs continue to pressure equipment manufacturers’ net profits, stronger-than-expected revenues from several companies, including Juniper, Ciena, and Infinera, also contributed to the growth of net profits or the improvement of losses.

North American and European Markets Continue to Perform Strongly, While Asia-Pacific Performance is Flat

In terms of regional markets, judging from the statistics of seven major listed equipment vendors (including Cisco, Ericsson, Nokia, Juniper, Ciena, Infinera, and ADVA) (based on constant exchange rates), the first three quarters of 2022:

Americas Market: a year-on-year increase of 9.6%. The seven equipment manufacturers achieved year-on-year growth, among which Ericsson, Nokia, and Juniper grew by double digits. However, Ericsson said the North American market has started to slow down and expects a flat outlook for the next few years.

EMEA Market: up 4.4% year-on-year. Ericsson increased by 11.4% year-on-year, Ciena fell by 21.5% year-on-year, and the remaining five rose and fell in low single digits year-on-year. As of Q322, the regional market has also grown year-on-year for seven consecutive quarters.

Asia-Pacific Market: increased by 0.4% year-on-year. Overall, the Asia-Pacific market will perform relatively flat in 2022, of which Q122 is affected by the blockade of the epidemic in China.

Huawei’s Revenue Decline has Stopped, and ZTE’s Revenue is Expected to Increase by 10% Annually

Huawei: Revenue in the first three quarters of 2022 was 445.8 billion yuan, a year-on-year decrease of 2.19%; of which, revenue in the third quarter was 144.2 billion yuan, a year-on-year increase of 6.5%. The profit margin in the first three quarters was 6.1%, a year-on-year decline, but it has improved compared to 4.3% in the first quarter and 5% in the first half of the year. The company’s sharp decline in revenue has stopped, which may be mainly due to the slowdown in the terminal business’s downward trend. In addition, Huawei stated that the company’s ICT infrastructure business had maintained steady growth.

ZTE: Revenue in the first three quarters of 2022 was 92.559 billion yuan, a year-on-year increase of 10.42%; gross profit margin was 37.43%, a year-on-year increase of 0.61 percentage points; net profit was 6.82 billion yuan, a year-on-year increase of 16.52%. Domestic market revenue was 40.60 billion yuan, a year-on-year increase of 12.9%. The revenue of the three major businesses all increased year-on-year. In terms of operator networks, according to the latest reports from external organizations, the company ranks second in the world in terms of 5G base station shipments, second in 5G core network revenue, third in the world in optical network operator market share, and second in the world in overall fixed network market share.

Q422 Other Developments for Equipment Suppliers

DZS Turned to Foundry Mode and Chose Fabrinet

DZS company announced a cooperation agreement with Thailand’s Fabrinet to shift to the foundry manufacturing model strategically. Under the terms of the agreement, Fabinet will provide DZS with turnkey procurement, manufacturing, testing, order fulfillment, RMA services, and system integration. Upon completion of the transaction, DZS’ Seminole, Florida-based operations, supply chain, and manufacturing workforce will be reduced by approximately two-thirds.

Reliance and Xinmeiya Form a Joint Venture Company to Go One Step Ahead to Realize the Target of Self-Produced 5G Equipment

Reliance Jio is furthering its goal of developing network equipment in India by completing the formation of a joint venture with Sanmina to create a high-tech manufacturing hub in the country.

Ericsson Expands Production in India to Meet 5G Network Rollout

Ericsson and its partner Jabil will expand production capacity and operations in Pune to meet India’s 5G network deployment needs. Ericsson was the first telecom equipment supplier to set up a factory in India in 1994. Together with Jabil, it manufactures 4G and 5G radios, RAN computing, and microwave products.

Nokia Leads the Second Phase of the EU 6G Project, Officially Launched in January 2023

The European Commission (EC) has selected Nokia to lead the second phase of a major European 6G initiative, Hexa-X-II, to create a pre-standardized platform and system view that will be the basis for future 6G standardization.

Ericsson Plans to Invest Millions of Pounds to Build a 6G Research Center in the UK.

Ericsson is to establish a new research unit in the UK as part of a multi-million-pound investment to improve the UK’s future wireless connectivity.

Ericsson Spins Off its Local Russian Customer Support Business

Ericsson continues to exit the Russian market in an orderly manner. Ericsson’s wholly-owned Russian subsidiary has signed an asset transfer agreement to divest its local customer support business in Russia to a Russian company owned by the former operations manager of Ericsson’s Russian subsidiary.

Juniper Networks Names New Chief Revenue Officer

Juniper Networks announced that effective October 17, 2022, Chris Kaddaras had been named executive vice president and chief revenue officer, reporting to CEO Rami Rahim. Mr. Kaddaras will continue Juniper’s sales growth momentum and drive the strategic and operational elements of the company’s sales and partner functions.

Chapter 4  Analysis of the Status Quo of the Global Optical Components Market

4.1 In 2022, the Revenue of Foreign-listed Optical Device Manufacturers Will Increase by 25% Annually

4.2 The Average Gross Profit Margin of Optical Device Manufacturers Continues to Decline

4.3 Overseas-Listed Optical Device Manufacturers Turn from Profit to Loss

4.4 Q422 Optical Device/Chip Vendor Investment/Expansion Dynamics

Foreign Listed Optical Device Manufacturers: Demand is Still Strong, but IC Shortage Will Continue

Overall performance: According to various manufacturers’ and analysts’ financial forecasts, in 2022, the overall revenue of the four major foreign-listed optical device and module manufacturers (excluding Fabrinet) will increase by 24.8% year-on-year. Except for Emcore, which continued to decline sharply, the remaining three companies achieved growth.

The impact of mergers and acquisitions on revenue: II-VI completed the acquisition of Coherent on July 1, 2022, and began to consolidate Coherent revenue from Q322; Lumentum completed the acquisition of NeoPhotonics on August 3, 2022, and its Q322 revenue includes 8 weeks of NeoPhotonics revenue; Emcore Q322 income also includes the income of part of the acquired KVH business.

Coherent: Renamed to Coherent on September 8, 2022. Telecom and Datacom performed strongly, with record revenue from datacom transceivers. The current escalating trade tensions have had little impact on business.

Lumentum: The supply of specific IC components has not materialized as quickly as expected, and the shortage is expected to continue until fiscal 2024. Due to the shortage of ICs, the company expects a supply-demand gap of about $80 million in Q4, roughly the same as in Q3. Multiple transmission product lines have set quarterly records; the capacity of adjustable network edge modules will increase by 80%-100% in the next few quarters; ROADM sales revenue will increase by 23% ring-to-ring and 34% year-on-year. Datacom’s performance slowed down as demand from certain cloud customers slowed down.

AOI: 40G products are approaching the end of their life cycle, and the revenue decline is faster than expected; 400G Q3 revenue has doubled and will begin to climb; CATV demand continues to be strong.

Emcore: CATV business continues to shrink; the completion of the acquisition of the KVH inertial navigation product line marks the beginning of a new era for the company.

* In the third quarter of 2022, the average gross profit margin of foreign-listed optical device manufacturers was 23.5%, down 4.6 percentage points from the previous quarter. Mainly due to the decline in Emcore’s gross profit margin.

* Emcore gross margin was negatively impacted by acquisitions, a significant decline in the CATV business, and integration-related items.

* Coherent’s and Lumentum’s gross margins fell by 3.8% and 3.3% month-on-month, respectively. It is estimated that in addition to the acquisition of the business, the increase in costs caused by the shortage of materials has also had an adverse impact on the gross profit margin.

Overseas-Listed Optical Device Manufacturers Turn from Profit to Loss

In the third quarter of 2022, the net losses of several optical device manufacturers will increase or turn from profit to loss. Specifically, Lumentum incurred restructuring charges of $9.3 million in Q322, Coherent incurred supply chain costs of $7 million in Q322, and Emcore suffered losses due to a continued decline in revenue. (Explanation: Lumentum’s Q121 profit surge is due to the termination fee of $207.5 million for terminating the acquisition with Coherent)

Q422 Optical Device/Chip Manufacturer Investment Expansion and Other Trends-1

• Lumentum expands manufacturing operations and advanced R&D in Slovenia
• Molex Announces Expansion of Manufacturing Operations in Hanoi, Vietnam
• Molex expands North American manufacturing capabilities with the opening of a second state-of-the-art facility in Guadalajara
• EFFECT Photonics joins forces with Fabrinet to promote the mass production of highly integrated optical components
• Micron plans to invest $100 billion in New York to build the largest chip manufacturing plant in US history
• Samsung will establish a global semiconductor research center
• Samsung will expand DRAM and wafer foundry production capacity and add at least 10 EUV units
• Soitec Breaks Ground on Singapore Fab Expansion Project
• The EU agrees to invest 45 billion euros to support chip production and reduce dependence on foreign semiconductor manufacturing
• The UK plans to establish a national chip manufacturing center
• Construction of India’s first fab at the cost of US$3 billion may begin in a few months
• India’s Tata Group announced plans to enter the semiconductor industry with a plan to invest US$90 billion within five years

Chapter 5:  Status Analysis of the Global Optical Fiber and Cable Market

5.1 In 2022, the revenue of the five major optical fiber factories is expected to increase by 24% annually

5.2 From January to October 2022, my country’s optical cable output will increase by 12%

5.3 Ministry of Commerce: Continue to impose anti-dumping duties on Japanese and Korean single-mode optical fibers

5.4 China Unicom’s centralized procurement of 33,476 kilometers of mainline optical cables: YOFC and FiberHome won the bid

In 2022, The Revenue of the 5 Major Optical Fiber Factories was Expected to Increase By 24% Annually

On the whole: In 2022, the total revenue of the communication business (including the optical fiber and cable business) of the five optical fiber and cable suppliers will be approximately US$11.284 billion, an annual increase of 24%. This is the second consecutive year of double-digit growth.

• Corning: Passive optical networking is experiencing a multi-year growth wave driven by private and public infrastructure investments; companies are investing in right-scaling production to meet rising demand; Share in recent cost increases for energy and certain raw materials.
• Furukawa: Strong demand for fiber optic cables in North America and Europe; at the same time, raw material prices and transportation costs soared. Increase sales of high-value-added products (crimpable ribbon cables and specialty optical fibers) and increase North American plant productivity, correspondingly increasing global selling prices.
• Fujikura: FY22 (end-March 2023) full-year forecast was further raised, with strong data center and FTTx market demand, positive currency effects on sales, and better-than-expected helium shortages.
• YOFC: benefited from the recovery of the optical fiber and cable industry and accelerated business expansion at home and abroad, while the sales volume and average price of the company’s main products have increased, the operating environment has improved significantly, and the performance has maintained rapid growth.

From January to October 2022, My Country’s Optical Cable Output will Increase by 12%

According to Statistics from the National Bureau of Statistics:

From January to October 2022, the national optical cable production will increase by 12% year-on-year. According to data from the National Bureau of Statistics, from January to October 2022, the cumulative output of optical cables nationwide was 293.473 million core kilometers, a year-on-year increase of 12%.

According to data from the Ministry of Industry and Information Technology, the total length of optical cable lines has increased steadily. As of September 2022, the total length of national optical cable lines reached 58.76 million kilometers, a year-on-year increase of 6% and a net increase of 3.956 million kilometers over the end of the previous year. Access network optical cables, local network relay optical cables, and long-distance optical cables accounted for 62.2%, 36%, and 1.8%, respectively.

Q422 Other Dynamics of Optical Fiber and Cable Market

• Ministry of Commerce: Continue to Impose Anti-dumping Duties on Japanese and Korean Single-mode Optical Fibers

According to Article 50 of the “Anti-dumping Regulations of the People’s Republic of China,” the Ministry of Commerce proposed to the Customs Tariff Commission of the State Council to continue implementing anti-dumping measures based on the investigation results. The Customs Tariff Commission of the State Council made a decision based on the proposal of the Ministry of Commerce. Starting today, anti-dumping duties will continue to be imposed on imports of non-dispersion-shifted single-mode optical fibers originating in Japan and South Korea, and the implementation period will be 5 years.

• China Unicom’s 33,476-kilometre Trunk Optical Cable Centralized Procurement: YOFC and FiberHome Won the Bid

The procurement scale of this project is 33475.82 skin-long kilometers. The bidding announcement will be issued on October 27, 2022, the bidding will be opened on November 18, 2022, and the bid evaluation will be completed on November 18, 2022. After evaluation by the bid evaluation committee, YOFC ranked first with a bidding price of 384 million yuan (excluding tax), and the second winning candidate was Fenghuo, with a bidding price of 386 million yuan (excluding tax).

• Fasten Optical Communication Intelligent Manufacturing Project Successfully Settled in Suqian

Fasten Hongsheng Group was established in 1964. It is a large-scale listed company mainly engaged in producing metal products, and the industry involves diversified production and operation of optical communication and new materials. The company plans to invest in new optical communication intelligent manufacturing in Suqian Economic Development Zone.

The project aims to create a complete industrial chain of preform, wire drawing, and optical fiber manufacturing in the optical communication industry in northern Jiangsu.

• Hengtong Optoelectronics: The company’s Optical Fiber exports Account for about 20% of Output, and the Price is about 10% Higher Than Domestic

Hengtong Optoelectronics revealed at an investor event in October that the company’s optical fiber exports account for about 20% of its output, and its price is about 10% higher than domestic prices; Jiangsu Sheyang will build a new submarine cable production base, and the first phase is planned for the second half of 2023. It has been put into production, and it is estimated that the new production capacity will be about 1.5 billion yuan in the first phase

• Tongding Internet Plans to increase the Capital of Huaguang New Materials by 284 Million Yuan and Sell the Idle Assets of Tongding Light Bar.

Huaguang New Materials is mainly engaged in producing and selling optical fiber cables. Due to the need for business expansion, Huaguang New Materials plans to increase its registered capital by 58,000 yuan, of which the company intends to subscribe 28,420 yuan in monetary funds. After the capital increase is completed, the shareholding ratio of Huaguang New Materials will remain unchanged. At the same time, Huaguang New Materials intends to purchase the idle equipment and inventory assets of the company and its wholly-owned subsidiary Jiangsu Tongding Optical Rod Co., Ltd., to produce optical fiber preforms.

• YOFC Assisted in the Completion of the Baihetan-Zhejiang UHV Project

The project adopts Quanbei® ultra-low-loss G.652 optical fiber independently developed by YOFC in large quantities, realizing a large-scale and effective increase in the proportion of ultra-low-loss optical fibers made in China in UHV projects. Another breakthrough in the independent controllability of key core technologies has been achieved.

• Zhongtian Optical Fiber Can Circle the Earth 13,000 Times in 20 Years

On December 27, 2022, Zhongtian Technology Optical Fiber Co., Ltd. (hereinafter referred to as “Zhongtian Optical Fiber”) celebrated its 20th birthday. In 2002, Zhongtian successfully produced the first qualified optical fiber, opening a new era of independent research, development, and production. So far, Zhongtian’s optical fiber industry has supplied a total of 530 million core kilometers, which can circle the earth 13,250 times and help the construction of information networks in more than 100 countries and regions.

Chapter 6 Major Restructuring and Mergers and Acquisitions in the Optical Communication Market

6.1 Global Data Center M&A Transactions Will Still Be Active in 2022

6.2 Ciena acquires Tibit and Benu to enhance XGS-PON and 25G PON capabilities

6.3 Microsoft announced the acquisition of Lumenisity, a next-generation hollow-core fiber provider

6.4 Alphawave IP acquires optical DSP provider Banias Labs for US$240 million

6.5 VIAVI acquires Jackson Labs, a leader in PNT solutions

6.6 EXFO completed the acquisition of EHVA

6.7 The acquisition of assets by China Ceramic Electronics has great potential for the development of the semiconductor business.

Global Data Center M&A Transactions Still Active in 2022

Notable Trend: Influx of Private Funds

Private equity buyers accounted for 42% of deal value between 2015-2018. Private equity’s share of total deal value rises from 2019 to 2021 as the overall level of M&A activity surges.

Rise to 65%, while private equity’s share jumps to over 88% in the first three quarters of 2022.

Large Data Center M&A Transactions

• KKR and Global Investment Partners acquire CyrusOne for $15 billion
• Digital Bridge acquired Switch for $11 billion
• American Tower acquires CoreSite for $10.1 billion
• Blackstone acquires QTS Realty for US$10 billion
• Digital Realty acquires Interxion for $8.4 billion
• Digital Realty to acquire DuPont Fabros for $7.6 billion
• Equinix acquires Telecity for $3.8 billion
• Equinix to acquire Verizon’s data centers for $3.6 billion
• China’s Jiangsu Shagang Group acquires Global Switch for more than $8 billion

Ciena Acquires Tibit and Benu to Enhance XGS-PON and 25G PON Capabilities

Ciena Acquires Tibit and Benu to Strengthen its Market Position in XGS-PON and 25G

PON

On November 22, 2022, Ciena announced the acquisition of Tibit Communications and Benu Networks to take control of its destiny in the expanding XGS-PON market and strengthen the company’s relationship with major Tier 1 telecom operators and cable TV operations business in The relationship between switching, routing and optical transport.

North American FTTH Investment is at a Historically High Level

Total North American service provider spending on PON equipment has grown from $774 million in 2019 to $1.9 billion in 2022. The technology with the most obvious growth trajectory is XGS-PON. Between 2019 and 2022, XGS-PON OLT port shipments will increase by 22,231%, jumping from 32,000 in 2019 to 748,000 in 2022. The 2022 numbers could have been even higher were it not for ongoing supply chain issues resulting in a large supplier backlog.

North American Cable TV Operators Gain Momentum

Cable operators in North America and Europe are under pressure to expand their fiber footprints as they face stiff competition from fiber overbuilders. Expanding fiber footprints is a strategy for many small cable operators in North America and will continue to be. Even Tier 1 operators in Europe, such as Liberty Global and Vodafone, have started large-scale fiber construction. The result is a steady and substantial increase in remote OLT port shipments, especially in North America.

Q422 Other Mergers and Acquisitions in the Communications Industry

Microsoft Announces Acquisition of Lumenisity, Provider of Next-Generation Hollow-Core Optical Fiber

On December 9, 2022, Microsoft announced the acquisition of UK-based Lumenisity® Limited, a leader in next-generation Hollow Core Fiber (HCF) solutions. This acquisition will expand Microsoft’s ability to optimize its global cloud infrastructure further to meet the stringent latency and security requirements of Microsoft’s cloud platform and service customers. HCF technology can also be widely used in medical, financial services, manufacturing, retail, and government network infrastructure.

• Alphawave IP Acquires Optical DSP Provider Banias Labs for $240 Million

On October 13, 2022, Alphawave IP Group plc (Alphawave), the global leader in high-speed connectivity for technology infrastructure in the world, announced that it had invested US$240 million to acquire Banias Labs, an Israeli data center optical digital signal processor (DSP) chip developer. The data center is Alphawave’s core high-growth market, and this acquisition will strengthen Alphawave’s roadmap development plan for optical DSP silicon products in the data center field.

• VIAVI Acquires Jackson Labs, Leader in PNT Solutions

On October 6, 2022, VIAVI Solutions announced the completion of the acquisition of JacksonLabs Technologies. The latter is a leader in Position, Navigation, and Timing (PNT) solutions for critical infrastructure serving military and civilian applications.

•  EXFO Completes Acquisition of EHVA

In October 2022, EXFO completed the acquisition of EHVA. This acquisition will accelerate EXFO’s innovation in PIC testing, providing automatic and complete end-to-end testing solutions to meet the needs of many industries, from laboratory R&D to high-speed mass production. The test requirements of the environment for optical devices.

• The Merger and Reorganization of China Ceramic Electronics Will be implemented, and the Acquisition of Assets and Semiconductor business has Great Potential for Development.

On November 17, 2022, China Ceramic Electronics issued a revised announcement on mergers and acquisitions. China Ceramic Electronics intends to issue shares to China Electric Technology No. 13 Institute to purchase its 73.00% equity of Pauway Corporation, the assets, and liabilities of the radio frequency chip business of GaN communication base stations and plans to issue shares to China Electric Technology No. 13 Institute, Digital Light, Zhixin Internet, Dianke Investment, Capital Kefa, Shunyi Kechuang, and SDIC Tianjin issued shares to purchase 94.6029% of the shares of Guolian Wanzhong held by them in total. This transaction aims to inject related businesses of gallium nitride communication base station radio frequency chips and devices, silicon carbide power modules, and their applications into the listed company.

• Tongding Internet Sold 51% Equity of Baizhuo Network for 84.15 Million Yuan

• Huagong Technology Intends to Transfer 43.06% Equity of Rui Chuangxinda for 94.6993 Million Yuan.

• Lumen Spins off EMEA Business to Colt for $1.8bn

• Ziply Fiber Reaches Acquisition Agreement with Fiber Communications

• Verizon Plans to Acquire West Central Wireless

• Aeris to Acquire IoT business from Ericsson

• Nexperia Acquires Dutch Semiconductor Company Nowi

Chapter 7:  New Products and New Technologies

7.2 New Trends of IPEC and O-RAN Alliance

7.3 New products and new technologies—tests/equipment/testing equipment

7.4 New products and new technologies – chips

7.5 New products and new technologies–passive components/lidar

7.6 New products and new technologies – achievements of

    New Developments of IPEC and O-RAN Alliance

IPEC Released the Industry’s First 400GE Optical Module Interconnection and Interoperability Test Standard

In September 2022, IPEC (International Optoelectronic Commission) officially released the industry’s first “100 Gbit/s/Lane-based 100 Gbit/s and 400 Gbit/s PAM4 Optical Module Test Specification” (hereinafter referred to as “test specification”). The specification is led by the IPEC test group, and many member units such as China Academy of Information and Communications Technology, Accelink, Huawei, Source, ZTE, and YOFC participated in the compilation. Module manufacturers and their customers can identify potential incompatibility issues and risks early and accelerate the process of large-scale commercial use.

The test specification comprehensively and detailedly regulates the test points of 400GE PAM4 optical modules to ensure good interconnection and reliable data transmission between devices, especially from interoperable receiving sensitivity, interoperable FEC capability, interoperable overload optical power, and other tests. The interconnection of 400GE optical modules and the interoperability system test are clearly defined and standardized in the project.

O-RAN Alliance Successfully Holds Autumn PlugFest with 106 Participating Companies

In December 2022, the O-RAN Alliance (O-RAN Alliance) announced that the 2022 Fall O-RAN Global PlugFest was successfully held in 6 venues in Asia, Europe, and North America, and a total of 106 companies participated in the event.

Testing and integration at the O-RAN PlugFest demonstrate the growing maturity of O-RAN technology across all regions. By comparing the results of PlugFest from year to year, it can be seen that the O-RAN ecosystem has made significant progress in conformance and interoperability testing, as well as more advanced end-to-end and network automation scenarios. O-RAN PlugFest greatly facilitates the development of commercial O-RAN networks.

New Products and New Technologies – Chips (1)

• Coherent Cooperates with ETRI and KAIST to Focus On Advanced Semiconductor Devices for the Korean Market

Coherent announces that it has signed a memorandum of understanding with two Korean institutions—the Electronics and Telecommunications Research Institute (ETRI) and the Korea Advanced Institute of Science and Technology (KAIST)—to facilitate collaboration in advanced electronic and photonic devices, with a focus on Focus on the Korean market.

• MACOM Released a New PURE DRIVE Chipset Supporting 400G Linear Architecture

MACOM named the new linear driver and TIA chipset MACOM PURE DRIVE. This chipset aims to replace the digital signal processor (DSP) solution with an analog integrated circuit (IC) solution in an optical module in a linear interface architecture and to provide linear signal recovery during optical-to-electrical conversion.

• Lightwave Logic and Polariton Announce World-class Performance of Plasmonic Polymer Light Modulators

The modulator uses electro-optic polymers and a plasmonic device design in collaboration with Polariton Technologies. These latest performance data results show the potential of optical network equipment to be extremely energy-efficient and clearly show that polymer-based technology platforms are suitable for general implementation.

• Imec and Nokia Jointly launched the first uplink 100Gbit/s PAM-4 linear Burst Mode TIA Chip.

IDLab and Nokia launched an uplink linear burst trans-impedance amplifier (TIA) chip, compatible with 50 Gbit/s NRZ and 100 Gbit/s PAM4 modulation. The researchers believe this new TIA chip is crucial in enabling next-generation flexible PON deployments, especially 100G PON. Economic viability is paramount.

• Credo Launched a New Single-channel 112G/s High-speed Digital Signal Processing Retimer Chip.

Credo launched the Screaming Eagle 112G LR (Long Distance) digital signal processing Retimer chip with a capacity of up to 1.6Tbps and supports multiple port rates.

• Marvell Unveils Industry’s Most Comprehensive 3nm Data Infrastructure IP Portfolio

Leveraging Marvell’s success in 5nm technology, this suite of advanced technologies provides its customers with cutting-edge monolithic and multi-chip solutions in the industry’s most advanced process nodes for computing, next-generation 100T Ethernet switching, and 5G advanced baseband handling the most demanding infrastructure requirements.

• Marvell Announces Sampling of 100G per lane AEC Using its PAM4 DSP Technology

Marvell announced that Amphenol, Molex, and TE Connectivity are sampling 100G Active Cable per Lane (AEC) powered by the Marvell Alaska APAM4 DSP. Marvell’s industry-leading PAM4SerDes technology and Alaska’s A-Series Ethernet IP enable the performance of the new interconnect, complemented by the power and speed advantages of leading-edge process nodes.

• Marvell Introduces Secure 1.6T Ethernet PHY for Cloud and 5G Markets

Marvell introduced the Alaska C X9340P, a new 5nm 1.6T Ethernet PHY. The latest products feature 100G I/O capabilities with built-in Media Access Control Security (MACsec) and full Precision Time Protocol (PTP) support, making them suitable for cloud data centers and communication network applications.

• Marvell Launches 5nm Electro-optic Platform to Expand 800G PAM4 DSP Leadership.

Marvell is sampling its Spica Gen2 800Gbps PAM4 electro-optical platform, designed to improve cloud data center bandwidth and performance. The highly integrated Spica Gen2 platform is based on advanced 5nm process technology. It is equipped with trans-impedance amplifiers (TIA) and drivers to save energy and facilitate the transition of data centers to 800Gbps networks.

New Products and New Technologies – Chips (2)

• Sailor Technology successfully launched the 400G (DR4) low-power consumption solution for the silicon optical modulator chip.

The silicon optical modulator chip independently developed by Sailor Technology can greatly reduce the power consumption of the optical module and realize the industry-leading, extremely low power consumption of the optical module with a full temperature of less than 7.6W, which provides a new solution for the increasingly severe energy consumption problem of the data center. s solution.

• Insigrel Released the Industry’s First 400G MZ Driver with Integrated silicon Photonics Chip Control Function.

Chengdu Insica Semiconductor announced the launch of the industry’s first four-channel MZ driver ISG-D5640 with integrated silicon photonic chip control function authorized by the invention patent. This product is suitable for 400Gbps DR4 and 800Gbps DR8 silicon photonic module applications and has begun to provide samples.

• Xinwave Microelectronics Released a Series of High-end Burst Mode Transimpedance Amplifier Products

Xinwave Microelectronics released the high-sensitivity 10G XGSPON burst mode transimpedance amplifier chip XB1202 that meets the E2 standard. Compared with XB1201, the chip of XB1202 has improved in input equivalent noise level, small signal trans-impedance gain, etc.

• Dugen Laser Launched Communication-grade Single-mode 980nm Semiconductor Laser Chips and Modules.

Dugen Laser officially released communication-level single-mode 980nm semiconductor laser chips and modules, realizing the localization of communication-level single-mode 980nm laser chips and modules in China.

• Jingkong Integrated Launched the 4-channel Guangtong EML Control chip PI10804

Jingkong Integration has launched the analog front-end integrated product PI10804 for the 400G/800G optical module of the electrical absorption modulation scheme in the data center. PI10804 is optimized for the monitoring function of 4-channel electro-absorption modulated lasers. PI10804 includes current-mode DAC (IDAC), voltage-mode DAC (VDAC), multi-channel input ADC, internal reference voltage, serial communication interface, and error alarm and shutdown Features. PI10804 can provide small-sized wafer-level packaging products. The leading small-sized package and low power consumption make PI10804 the preferred solution for compact and low-power optical modules based on EML solutions.

• Mitsubishi Electric Starts Sample Delivery of “Tunable Laser Diode Chips” for Optical Fiber Communications

Mitsubishi Electric announced the availability of samples of a new product, a tunable laser diode chip, for use in optical transceivers for fiber optic communication systems. The new chip will help increase the capacity of coherent digital communications while shrinking the size of optical transceivers.

• Anritsu Released High temperature Version 1.31um SOA CoC

Antrisu released a high-temperature version of 1.31um SOA CoC for optical amplification at the receiving end of compact optical modules. The new semiconductor optical amplifier (SOA) has high gain and low polarization-dependent gain at a high temperature of 45°C. It contains an aluminum nitride (AlN) compact carrier that can be used with silicon platforms to configure optical modules.

• TRUMPF Multi-junction VCSEL Boosts System Efficiency and Miniaturization Trend

Trumpf Optoelectronics expands its product portfolio with high-performance multi-junction VCSEL arrays to support consumer electronics and automotive miniaturization requirements. With the tunneling function, a single VCSEL is improved, as multiple active regions are connected in series in the same VCSEL component to produce up to three times the output.

• Lockheed Martin and AyarLabs jointly Develop Advanced Microchip Connection Solutions for Next-generation Sensing Systems.

LOCKHEED MARTIN and AyarLabs announced a strategic cooperation. The two parties will jointly develop a future-oriented sensing platform based on AyarLabs’ advanced optical I/O microchip, which uses optical transmission technology to transmit data, which can be achieved compared to existing electrical I/O solutions. Higher speed, lower latency, and less power consumption. The new platform provides the ability to capture, digitize, transmit and process spectral information for U.S. Department of Defense (DoD) applications.

New Products and New Technologies—Passive/lidar, etc.

• SUNCALL Introduces New MPO Connectors for Different Configurations

SUNCALL introduces a new MPO connector suitable for multi-functional needs, which provides easier operation through push-pull boots and is suitable for different configurations.

• Lightas launched the MJC fiber optic connector, MT plastic ferrule guide pinhole does not wear

An improved MPO fiber optic connector, newly launched by Ningbo Laitas, has a new MPO mechanical structure, which completely solves the problem of rapid wear of the MT plastic ferrule guide pinhole, the core component of the traditional MPO fiber optic connector.

• Ouyi Optoelectronics MEMS 1×32 Polarization Maintaining Optical Switch

The new MEMS 1×32 polarization-maintaining optical switch is based on MEMS (micro-electromechanical system) technology that allows channel selection between a single input and 32 output lights. It has a small size, long life, stable reliability, etc. Features can be applied to optical network fields such as OADM and OXC.

• The New High Extinction Ratio Polarization Maintaining Coupler on Ouyi Optoelectronics Products

Ouyi Optoelectronics’ new high extinction ratio polarization-maintaining coupler is based on fused tapered or planar waveguide technology, a power-splitting device. Polarization-maintaining fiber can stably transmit two orthogonal linearly polarized lights and keep their polarization states constantly. This product is widely used in WDM and FTTX systems.

• Huahai Communication Released the World’s First 32-fiber-pair Submarine Line Splitter.

Huahai Communication released the world’s first 32-fiber pair submarine line branching unit (Branching Unit). This product meets the transmission needs of Petabit-level ultra-large capacity, leads the new generation of “flexible connection” technological change in the global submarine cable industry, and brings more possibilities for transoceanic communication systems.

• ColorChip Joins Forces With Dispelix and Maradin to Advance Laser Beam Scanning (LBS) Solutions for AR Glasses Applications

ColorChip joins forces with Dispelix and Maradin to form a partnership to advance further Laser Beam Scanning (LBS) solutions for AR glasses. The collaboration integrates Dispelix diffractive waveguide display, color chip PLC (planar light circuit) beam combiner, and Maradin MEMS projection technology for LBS.

• EMCORE Introduces New TAC-450 IMU Integrating PIC Technology, Tactical-Grade Gyroscope, and Inertial-Grade Accelerometer

EMCORE has announced the new TAC-450 IMU that integrates PIC technology, a tactical-grade gyroscope, and an inertial-grade accelerometer. The TAC-450 Inertial Measurement Unit (IMU) has a compact design, robust performance, and survivability to meet the needs of commercial and military platforms.

• Coherent Launches Advanced Industry 4.0 Integrated Laser Welding Head Vision System

Coherent has launched HIGHvision, a machine vision system for laser welding heads that can greatly improve the manufacturing efficiency of electric vehicle (EV) batteries and motors. HIGHvision is a turnkey system of advanced machine vision hardware and software that aligns laser welding heads to software-defined workpiece features with ultra-high precision in milliseconds.

• Coherent Launches 30 kW Laser Cutting Head

Coherent introduces the next generation of its flatbed cutting laser head series with ultra-high power ratings of up to 30 kW. This next-generation BIMO-FSC3 cutting head is available in three product variants, each optimized for one of the following applications: ultra-high laser power output of up to 30 kW, efficient ring laser beam management, and reliable run.

• Sagitar Released Solid-state Blind-filling LiDAR and Joined Forces with Luxshare to Build a Large-scale Vehicle-mounted LiDAR

Sagitar released the all-solid-state blind-filling lidar RS-LiDAR-E1 (E1 for short) based on a self-developed chip and a new technology platform. E1 takes the self-developed chip as the core and builds a new product platform around the area array transceiver technology. E1 is mass-produced for pre-installation without any moving parts inside. With a small number of parts, it perfectly considers the detection performance of lidar, cost advantages, and car-level safety and reliability.

• Accelink Launched a One-stop solution for Optical Devices for Automotive Lidar.

The 1550 MOPA optical module launched by Accelink Technology has an operating temperature range from -40°C to 105°C, suitable for vehicle applications, with high and stable pulse power in the full temperature range. Qualitative, peak power up to 1kW@500kHz, 2ns.

Chapter 8: Global Optical Communication Market Forecast

8.1 Data Center / 5G / FTTH Investment Forecast

8.2 In 2023, the revenue of equipment manufacturers will maintain a single-digit growth

8.3 In 2023, the revenue of major listed optical device manufacturers is expected to increase by nearly 12% annually

8.4 In 2023, the demand for optical fiber and cable is strong, and the price of bare optical fiber will fall

Data Center / 5G / FTTH Investment Forecast

Dell’Oro estimates that capital expenditures for hyper-scale data centers will grow by about 28% in 2022. However, as the hyper-scale enterprises will gradually end their expansion cycle and the enterprise, IT capital spending will be tightened in an uncertain business environment, and data center capital spending growth is expected to drop to single digits in 2023.

Despite the unfavorable macroeconomic environment, European spending on software and security hardware is expected to remain relatively stable over the next few years. Cloud has become a key technology to help organizations improve their resiliency. Total cloud-related spending in Europe will account for nearly one-third of total technology spending in 2022, a proportion that will continue to grow over the next five years.

Over the past few years, T-Mobile, AT&T, and Verizon have spent billions of dollars upgrading their 5G networks with a mid-band spectrum. But Verizon and T-Mobile have already hinted that those programs will end in 2023, and AT&T’s spending could also fall. As a result, starting in 2023, all major 5G operators in the U.S. are likely to cut the 5G CAPEX drastically.

AT&T, Lumen Technologies, Altice, and other U.S. fiber builders are facing issues ranging from licensing challenges to labor shortages to supply chain issues. Therefore, the analysis agency lowered its forecast for fiber optic construction in the United States in 2023. But even lower expectations mean the market will still grow significantly.

China Telecom: It is expected that the scale of 5G investment will be stable and moderate in 2023-2024, and the proportion of investment in industrial digitalization will increase, and strive to reduce the proportion of capital expenditure to revenue to below 20% in 2025. China Mobile: From 2023 onwards, capital expenditure will no longer increase, and the proportion of revenue will fall to less than 20% after three years. China Unicom: It will continue to promote the construction of a 900MHz low-frequency network. In 2023, it will continue to increase investment, build no less than this year’s number of 900MHz base stations, and upgrade a large number of L900 4G base stations, help build more than 200 Gigabit cities across the country.

Equipment Manufacturers’ Revenue Will Maintain Single-Digit Growth in 2023

• Judging from the speculation of listed companies and the forecasts of securities analysts, the total sales revenue of the eight equipment manufacturers is expected to increase by 4.84% annually in 2023, and all eight equipment manufacturers will achieve growth. This will be the market’s third consecutive year of growth (5.71% in 2021 and 8.03% in 2022).
• Due to strong demand in 2022 and tight supply, equipment manufacturers have a large backlog. Entering 2023, although the economic situation is still severe, and investment in some markets may be tightened, as the supply situation eases and most equipment manufacturers increase order prices by an average of 10-15%, equipment manufacturers’ revenue is expected to continue to maintain increase.

In 2023, The Revenue of Major Listed Optical Device Manufacturers is Expected to Increase by Nearly 12% Annually

• According to analysts’ forecasts, in 2023, the total revenue of the 6 listed optical device/module manufacturers at home and abroad will increase by 11.57% annually.
• As supply chain shortages in 2022 have left optical component/module suppliers with a large backlog of orders, these backlogs will provide a buffer against expected weaker demand in early 2023. Overall, the market demand will continue to be strong in 2023, and the supply of IC components will also begin to improve, but the shortage will continue; the demand for the telecom sector will be relatively stronger, and the growth of the datacom sector will slow down due to the slowdown in demand from some cloud customers.

In 2023, the Demand for Optical Fiber and Cable will be Strong, and the Price of Bare Optical Fiber Will Fall

Global Market: Passive Optical Networks Are Riding a Multi-Year Growth Wave

Under the influence of the new crown epidemic, the development of the global digital economy has pressed the fast-forward button. Passive optical networks are experiencing a multi-year growth wave driven by investments in the data center, wireless, and fiber optic infrastructure.

Chinese Market: The Industry has Entered a New Cycle of Rising Volume and Price

The optical fiber and cable industry fell into a short-term trough in the first two years. With the “14th Five-Year Plan” Information and Communication Industry Development Plan,” “5G Application “Sail” Action Plan (2021-2023)”, “Dual Gigabit” Network Collaborative Development Action Plan (2021-2023)” and a series of favorable policies have been introduced. The industry has entered a new cycle of rising volume and price.

CRU: Global Bare Fiber Prices will Begin to Fall in 2023

Facing 2023, CRU expects that with the easing of raw material supply constraints, the cost pressure of fiber optic production will ease, and other input costs, such as energy, should also return to normal from 2023. However, it may take longer in Europe. Corning’s new fiber optic plant in Poland will bring new capacity and is expected to further dampen the underlying price environment in the European market in 2023 and beyond. Therefore, CRU predicts that global bare fiber prices will start to fall.

Summary and Forecast

• In 2022, the number of global 5G contracts will reach 1 billion, two years earlier than 4G. One of the reasons is that China will deploy 5G on a large scale ahead of schedule.
• Global fixed broadband connections will reach 1.45 billion in 2022, an annual increase of 90 million. China’s FTTH/O users are about 600 million, with an annual increase of more than 50 million.
• In 2022, the total Revenue of seven major foreign-listed equipment manufacturers will be close to US$115.1 billion, a slight increase of 0.5% year-on-year. Equipment manufacturers said the demand continued to be strong, there was a large backlog, and the supply shortage eased in the year’s second half.
• In 2022, the overall sales revenue of 4 major foreign listed optical device and module manufacturers will increase by 24.8% annually, the overall Revenue of 17 listed companies related to optical devices/materials in mainland China will increase by 19%, and the operating Revenue increased by 12.6% year-on-year. Demand in the overseas datacom and access network markets continues to be strong, but supply shortages and epidemic blockades limit growth.
• In 2022, the total Revenue of the communication business (including the optical fiber and cable business) of the five optical fiber and cable suppliers will be approximately US$11.284 billion, an annual increase of 24%. This is the second consecutive year of double-digit growth. Market demand is strong, waterial costs have soared, and product prices have also risen.
• In 2023, the growth rate of capital expenditure of hyper-scale data centers is expected to drop to single digits, the construction of 5G and optical fiber broadband in the United States is expected to slow down, and the three major operators in China have also begun to slow down 5G investment.
• In 2023, although the economic situation is still severe, and investment in some markets may be tightened, as the supply situation eases, the backlog of orders is expected to slow down and weaken demand. The Revenue of industry chain companies is expected to maintain growth.