Chapter 1 Xunshi Index & Industrial Chain Overview
1.1 Overview of Revenue Performance of Upstream and Downstream Industry Chains
1.2 Looking at Changes in the Communications Industry from Xunshi Index
1.1 Overview of Revenue Performance of Upstream and Downstream Industry Chains
Internet Companies: The annual revenue growth rate in 2022 will be 7.1%, a sharp slowdown compared to the growth rate of 27.7% in 2021. Reasons for the slowdown include the epidemic, a slowdown in the global economy, and tightening regulations.
Telecom Operators: The revenue of China’s three major operators will increase by 9.7% in 2022, driven by digitalization; the revenue of North American operators will decline by 3.1% (due to the divestiture of AT&T’s video business).
Equipment Manufacturers: The overall revenue of the three equipment manufacturers in China will resume growth in 2022, mainly because Huawei’s revenue will recover from a decline of 28.6% in 2021 to a growth of 0.9% in 2022. The acceleration of foreign equipment manufacturers’ revenue growth is mainly due to the strong demand in the 5G and broadband access markets and also benefited from the “replacement of Huawei equipment” initiatives in Europe and the United States.
Device Manufacturers: The market demand is strong, but the shortage of chips limits revenue growth. According to ICC statistics, in 2022, the negative impact of supply constraints on Coherent and Lumentum’s revenue will exceed $600 million. In terms of Chinese optical device manufacturers, the performance of some companies has declined due to the epidemic’s impact.
Chip Makers: Revenue will grow by 19.1% in 2022, a sharp slowdown from 37.1% in 2021. Reasons include sluggish demand, US export controls on some chips, the impact of the epidemic, and macroeconomic weakness.
Fiber Optic Cable Suppliers: Revenue will continue to grow rapidly in 2022. Driven by the construction of optical fiber network infrastructure in Europe, America, and other places, the market is in short supply. Mainstream suppliers such as Corning continue to expand production.
1.2 Looking at Changes in the Communications Industry from Xunshi Index
As of March 31, 2023, the Xunshi index value was 145.91, down 14.27% from 170.20 in the same period last year. Except for optical fiber and cable, the rest of the sectors have declined:
— Operators 86.52, down 4.84%
— Equipment manufacturers 107.97, down 10.72%
— Content provider 97.79, down 36.21%
— Device manufacturers 193.30, down 13.24%
— Chip manufacturers 217.57, down 0.36%
— Optical fiber and cable vendors 101.91, up 0.63% year-on-year
Due to the sluggish macro economy, slowing revenue growth, and accumulated inventory during the epidemic, most service providers plan to shrink expenses this year. The market demand in the first half of the year was relatively weak. At present, the industry generally expects that the market is expected to resume growth in the second half of the year.
Explanation: After large foreign device manufacturers merged, some device manufacturers withdrew from the market. The Xunshi stock index no longer counts these delisted companies, so the overall sector index rose.
Chapter 2 Analysis of the Status Quo of the Global Operating Market
2.1 5G and FTTH User Development
2.2 Global and Chinese 5G Network Investment and Deployment Status
2.3 Capital Expenditure Analysis of China’s Three Major Operators in 2023
2.4 Global and Chinese Data Center Investment and Construction
2.5 Other Investment Trends of Service Providers in 1Q23
2.1 5G and FTTH User Development
2.1.1 In 2023, the Number of Global 5G Contracts will Reach 1.77 Billion, with an Annual Increase of 620 Million
Number of 5G Subscriptions: By the end of 2022, the number of 5G subscriptions will reach 1.15 billion, an annual increase of 530 million or 85.9%, accounting for 10.7% of all mobile subscriptions. It is estimated that 5G contracts will reach 1.77 billion in 2023.
Sub-regions: 755 million 5G contracts in Asia-Pacific (an annual increase of 316 million), accounting for 65.5% of the world; North America 194 million (an annual increase of 103 million), accounting for 16.8% of the world; Europe 141 million (the annual increase of 76 million), accounting for Global 12.3%; other regions accounted for 5.4%.
Fixed Broadband Connections: Point Topic predicts that by the end of 2030, global fixed broadband subscriptions will reach 1.6 billion. Emerging market growth will be the strongest. Before 2030, the growth rate of emerging markets will reach 45.5%, the growth rate of young markets will reach 15.7%, and the growth rate of mature markets will reach 8.1%; the household penetration of fixed broadband in China The rate is already high, so the growth rate of the Chinese market will slow down significantly to 4.6%.
2.1.2 China’s 5G Package Users Reach 1.137 Billion, Gigabit Fixed Users Exceed 100 Million
5G Package Users: As of the end of February 2023, the three major operators had a total of 1.137 billion 5G package users, an increase of nearly 42.61 million compared to the end of 2022. China Mobile accounted for 56.2%, China Telecom accounted for 24.5%, and China Unicom accounted for 19.3%. At the same time, 5G mobile phone users reached 592 million, a net increase of 31.29 million from the end of the previous year, accounting for 34.9% of mobile phone users.
Wired Broadband Users: As of the end of February 2023, my country’s FTTH/O users are close to 570 million, an increase of about 22.77 million compared with the end of 2022. 1000M fixed broadband users reached 102 million, an increase of 10.3 million compared to the end of 2022. Wired broadband access users increased steadily, and gigabit users exceeded the scale of 100 million.
2.2 Global and Chinese 5G Network Investment and Deployment Status
2.2.1 Global 5G and 5G SA Investment and Commercial Situation
The report released by GSA on March 21, 2023, shows (as of the end of February 202):
– 5G investment: 523 operators in 155 countries/regions worldwide are investing in 5G, 8 more than 3 months ago.
– 5G commercial: 249 operators in 97 countries have commercialized 3GPP-compliant 5G services (mobile or fixed wireless access).
– 5G SA: 115 operators are investing in public standalone 5G in evaluation, testing, pilot, planning, deployment, or already in commercial use. 40 of these operators have deployed or commercialized standalone 5G in public networks.
By the end of 2022, the global 5G has entered a stage of rapid development, with more than 1 billion 5G users, leading operators in China, South Korea, Switzerland, Finland, Kuwait, and other countries, the 5G user penetration rate has exceeded 30%. The 5G network bearer has exceeded 30% of traffic. Over 40% of the world’s 5G operators have provided 5G innovative applications.
—Excerpt from Huawei 2022 Annual Report
2.2.2 The Construction of China’s 5G Base Stations is Advancing Steadily, and the Construction of Gigabit Fiber Optic Broadband is Accelerating
72,000 New 5G Base Stations were Built from January to February: According to data from the Ministry of Industry and Information Technology, as of the end of February 2023, the total number of 5G base stations reached 2.384 million stations, accounting for 21.9% of the total number of mobile base stations. Among them, 72,000 new 5G base stations were built from January to February. 5G network construction is advancing steadily.
1.36 Million New 10G PON Ports were Added from January to February: As of the end of February 2023, the total number of FTTH/O ports reached 1.038 billion, a net increase of 13.21 million compared with the end of the previous year; the number of 10G PON ports with gigabit network service capabilities reached 16.59 million, a net increase of 1.362 million over the end of the previous year. The construction of a gigabit optical fiber broadband network was accelerated.
2.3 Capital Expenditure Analysis of China’s Three Major Operators in 2023
2.3.1 In 2023, the CAPEX of the Three Major Operators will Increase by 2.04% Annually
Total Investment: In 2023, the total capital expenditure budget of the three major operators will be 359.1 billion yuan, an annual increase of 2.04% compared to 351.9 billion yuan in 2022 (a net increase of 7.2 billion yuan.
Investment Cycle: Since the release of 5G cameras on June 6, 2019, the total capital expenditure of the three major operators has increased for five consecutive years. As can be seen from the figure on the right above, compared with the 4G investment cycle, the 5G investment cycle is relatively flat. In 2023, China Mobile’s capital expenditure will decline for the first time since the 5G construction cycle.
2.3.2 The 5G Investment of the Three Major Operators Will Continue to Decline in 2023
Total 5G Investment: In 2023, the 5G capital expenditure budget of the three major operators is about 147.7 billion yuan, which is about 8.09% lower than the 160.7 billion yuan in 2022 (a decrease of 13 billion yuan). Specifically, China Mobile has cut 5G spending, while China Telecom and China Unicom have not changed much.
5G Base Stations: A total of 2.285 million 5G base stations will be opened or in use in 2022, an increase of 865,000 compared to 2021. According to the plans of the three major operators, the cumulative number of 5G base stations opened or in use by the three operators will reach 2.865 million stations in 2023, an increase of 580,000 stations compared to 2022.
In 2023, the Three Major Operators will Significantly Increase Their Computing Power Network Investment
Investment in Computing Power Network: In 2022, the total investment of the three major operators will be 73 billion yuan, with an annual increase of 200 million yuan. In 2023, the budget of the three major operators is 98.1 billion yuan, expected to increase by 34.38% annually (an increase of 25.1 billion yuan). The budgets of China Mobile, China Telecom, and China Unicom are 45.2 billion yuan, 38 billion yuan, and 14.9 billion yuan, respectively.
IDC Racks: In 2022, the total number of IDC racks served by the three major operators will be 1.343 million, and 156,000 new racks will be added annually. In 2023, the three companies plan to add 114,000 IDC racks, of which China Mobile, China Telecom, and China Unicom plan to add 40,000, 47,000, and 27,000 racks, respectively.
2.4 Global and Chinese Data Center Investment and Construction
2.4.1 Progress and Planning of National Computing Power Network Construction (Released from January to March 2023)
Ministry of Industry and Information Technology: Increase Support for Computing Power Infrastructure and Forceful Computing Empowerment
The “East Counting and West Computing” project has been fully launched. My country’s data center racks have exceeded 6.5 million standard racks, and the number of servers has exceeded 20 million. The total scale of computing power ranks second in the world. In the future, it is necessary to increase support for computing power infrastructure and powerful computing empowerment and create a network architecture and computing power supply system that integrates cloud and network, computing and network integration.
Metaverse is Included in the Work Priorities of 30+ Provincial/Municipal Governments
All localities have successively issued government work reports for 2023, summarizing the work in 2022 and arranging key tasks for 2023. According to incomplete statistics, 30 provinces/cities have included Metaverse in the key tasks of government work in 2023.
Nearly 70 Data Center Projects will Start in 2023
On March 17, the CCTV News Network reported the progress of the “East Counting West Counting” project: the construction of eight national computing power hub nodes has all started, and the project has entered the comprehensive construction stage from the system layout. Among the 8 national computing power hubs that have started construction, nearly 70 new data center projects will be started in 2023. Among them, the construction scale of new data centers in the West exceeds 600,000 racks, doubling year-on-year. So far, the national computing power network architecture has been initially formed.
2.4.2 Domestic and Foreign Data Center Projects Started (1Q23)
- AWS plans to build a 23,000-square-meter data center in Virginia
- Google to build 381,000 sq ft data center in Navi Mumbai
- Oracle to invest $1.5 billion in Saudi Arabia data center
- NTT plans to invest $110 million in the construction of Texas data center TX3
- NTT will invest Rs 2,000 crore in the next few years to build the first data center in India
- TikTok plans to set up three data centers in Europe, investing 1.2 billion euros a year
- Digital Realty plans to develop a data center in Manassas, Virginia
- BDx will build a new 16MW data center in Kwai Chung District, New Territories, Hong Kong
- Damac plans to invest $600 million to expand the Saudi data center to 55MW
- Pumping Data invests US$1 billion to build a data center park in Batam
- AirTrunk starts phase 2 construction of TOK2 Tokyo data center
2.5 Other Investment Trends of Service Providers in 1Q23
AT&T Announces Major Network Milestones in 5G and Fiber Deployment
Over the past five years (2018-2022), AT&T has invested more than $140 billion, primarily in wireless and wireline networks in the United States. AT&T has the largest wireless network in the United States, covering more than 2.91 million square miles. AT&T Fiber has covered over 24 million locations in more than 100 metropolitan areas in the United States, including 4 million commercial locations.
AT&T Forms New Fiber Optic Joint Venture to Expand Cable Business
AT&T announced a joint venture with private equity firm BlackRock Alternatives to deploy fiber optic connections to as many as 1.5 million new locations. The locations would be outside AT&T’s existing 21-state cable network coverage and thus represent an expansion of the carrier’s cable ambitions.
Consolidated Slows Down Fiber Buildout
Consolidated initially aimed to upgrade 70% of its network to fiber optic by 2025. But due to inflationary pressures and billions of dollars in federal funding to be allocated in 2025, the company is now delaying that target until mid-2026 and lowering its expansion target for the year ahead.
Service Provider Other Deployment Planning
(1) Vodafone and Cityfiber trial 2Gig broadband in York
(2) Frontier plans to invest $100 million to expand fiber optics in West Virginia in 2023
(3) Google Fiber plans more expansions in Colorado and Arizona
(4) Google will build an FTTP network in Council Bluffs, Iowa
(5) Zayo announced the deployment of a new 400G route connecting Paris and Marseille
(6) AT&T has migrated over 52% of production traffic to next-generation “white box” core routers
(7) SK Telecom cooperates with Deutsche Telekom and T-Mobile US to enhance the influence of Metaverse platform ifland
(8) NTT DoCoMo and SK Telecom released the initial results of 5G and 6G cooperation
(9) NTT and KDDI jointly develop next-generation optical technology to prepare for 6G
(10) US CATV operator Cox announced the successful launch of mobile services across the US
(11) India’s Airtel Nxtra will double data center capacity by 2025
Chapter 3 Analysis of the Status Quo of the Global System Equipment Market
3.1 Global Telecom Equipment Market Performance
3.2 Mainstream Equipment Manufacturers: Customers are Adjusting Their Inventory
3.3 Revenue Exceeds Expectations Q422 Equipment Manufacturers’ Gross Profit Margin Rises Quarter-on-quarter
3.4 Net Profit of All Equipment Manufacturers in Q422 Increased Month-on-month
3.5 The North American Market Began to Slow Down, and the Asia-Pacific Market Gradually Improved
3.6 Huawei’s Revenue Increased by 0.9%, and ZTE’s Revenue Increased by 7.36%
3.7 Other Developments of Q123 Equipment Vendors
3.1 Global Telecom Equipment Market Performance
Optical Transmission Equipment: In 2022, calculated at constant exchange rates, the global optical transmission market will grow by about 4%, of which the WDM sector will grow by about 5%. Currency exchange rates remained a concern, dragging down market performance in many regions. North American optical transport equipment revenues rose 14 percent to over $4 billion.
PON Equipment: 2022 will be a record year for global broadband equipment spending, with revenue growing 17% annually. Among them, PON equipment revenue increased by 25% year-on-year, marking this segment’s fifth consecutive year of annual revenue growth. OLT and ONT revenue reached $11.7 billion. The total shipments of XGS-PON OLT ports in the year exceeded 2 million units, and the total global shipments reached 2.3 million.
Data Center Switches: Full-year 2022 sales reached new record levels. Shipments of 200Gbps and 400Gbps in 2022 are close to 10 million ports, accounting for more than 10% of total shipments and nearly 20% of total revenue. The main drivers of growth are these adoption speeds by large cloud service providers such as Google, Amazon, Microsoft, and Meta, as well as improvements in supply.
RAN Equipment: In 2022, the global RAN market will perform worse than expected. Nokia and Samsung had the strongest RAN revenue growth among the top five vendors. Dell’Oro has lowered its short-term RAN revenue outlook and expects global RAN revenue to be flat in 2023 compared to 2022, as a surge in investment in India will be offset by North America and China declines.
Service Provider Routers and Switches: In 2022, the global service provider routers and switches market will exceed $14 billion. North America led the world with double-digit growth, and the sharp decline in the Chinese market led to a double-digit decline in revenue in the Asia-Pacific region.
3.2 Mainstream Equipment Manufacturers: Customers are Adjusting Inventory Optical
Overall Performance： According to analysts and company financial forecasts, in the first quarter of 2023, seven major foreign listed companies will the total revenue of equipment vendors was approximately US$29.554 billion, a year-on-year increase of 10.9%. Market demand is strong, but customers have
After inventory adjustments are underway, some equipment manufacturers have lowered their revenue forecasts, and supply chain challenges still exist.
Cisco： Cisco now expects its fiscal 2023 revenue to increase by 9% to 10.5%, higher than previous expectations. But Cisco executives warned that spending by the company’s service provider customers remained somewhat subdued. Many of Cisco’s service provider customers have stored equipment for 6-12 months. He expects operators will put these products into service, and then customer orders will return to normal over the next few quarters as shortages ease.
Ericsson： Be optimistic about the long-term development prospects. The short-term outlook remains uncertain, operations Manufacturers will continue to reduce assets in response to macroeconomic headwinds and adjust inventory levels as supply conditions ease. These trends have already started impacting the company’s networking business in the fourth quarter and will continue through at least the first half of 2023.
Nokia: Looking forward to 2023, basic and mobile network businesses will continue to see a strong upward trend in demand. Despite the uncertain economic outlook, market demand will remain strong.
Juniper： Continue to feel pressure from supply chain shortages and increased component and transportation costs, and expect these challenges to improve modestly in 2023.
Ciena： Backed by strong fundamental drivers and visibility into our backlog, our business momentum is strong, and we remain confident in our ability to continue to capture market share.
Infinera： Supply chain costs are expected to remain high in the first half of 2023 and decline in the year’s second half.
ADTRAN: In early April, the Q1 forecast was lowered, mainly due to the impact of customer inventory adjustments (thought to be temporary and will improve in the second quarter) and supply constraints that made it impossible to meet all types of customer needs.
3.3 Revenue Exceeds Expectations, Q422 Equipment Manufacturers’ Gross Profit Margin Rises Month-on-month
In Q422, the average gross profit margin of the eight major listed equipment manufacturers was 43.8%, an increase of 1.06 percentage points from the previous quarter and a decrease of 10.70 percentage points from last year.
Among the 8 companies, from Q115 to Q422, only Cisco with an average gross profit rate higher than 60%, and Juniper dropped to 59.5%; between 40% and 50% are Ciena and ADTRAN, and the remaining 4 companies are between 30% and 40%.
Judging from the analysis of equipment manufacturers’ financial reports, supply chain cost pressure is still the main reason affecting gross profit margin performance; Q422’s higher-than-expected revenue growth has led to a quarter-on-quarter improvement in gross profit margin performance.
3.4 Q422 Net Profit of All Equipment Manufacturers Increased Month-on-month
In the fourth quarter of 2022, the net profits of the eight equipment manufacturers listed in the table above all increased month-on-month, and Infinera and ADTRAN turned losses into profits. Stronger-than-expected revenue drives higher net profit or improved loss.
3.5 The North American Market Began to Slow Down, and the Asia-Pacific Market Gradually Improved
In terms of the regional market, from 7 major listed equipment manufacturers (including Cisco, Ericsson, Nokia, Juniper, Ciena, Infinera, and ADVA) Looking at the statistics (based on constant exchange rates), in 2022:
Americas Market: a year-on-year increase of 10.3%. All seven equipment manufacturers achieved year-on-year growth, except for Cisco and Ciena, the remaining five grew by double digits. However, the Q422 North American market has begun to slow down.
EMEA Market: up 5.7% year-on-year. Ericsson increased by 10.2% year-on-year, Ciena and Infinera declined by double digits, and the remaining four companies increased by single digits.
Asia-Pacific Market: up 2.9% year-on-year. In 2022, the Asia-Pacific market will perform the weakest among the three major regions. Among them, Q122 will decline year-on-year due to the impact of China’s epidemic blockade and then improve quarter by quarter, with a year-on-year increase of nearly 10% in Q422.
3.6 Huawei’s Revenue Increased by 0.9%, and ZTE’s Revenue Increased by 7.36%
The slowdown in global economic growth and inflationary pressures in 2022 have brought challenges to telecom operators, but people’s continued demand for telecom services has eased the impact on the industry, and global telecom investment has remained stable.
Huawei： In 2022, the revenue will be 642.338 billion yuan, a year-on-year increase of 0.9%, and the overall operating conditions align with expectations. The operator business benefited from continuously upgrading ICT infrastructure such as 5G, Gigabit optical network, and optical network, and the operation remained stable. In 2022, Huawei and many leading operators around the world have launched 5.5G and F5.5G technology verification and network deployment; by the end of 2022, Huawei 400G has been deployed in more than 60 operator networks around the world; in China, Huawei assisted Operators have adopted the OXC and OTN optoelectronic fusion network construction solution to build more than 30 all-optical cities.
ZTE: In 2022, it will achieve revenue of 122.95 billion yuan, a year-on-year increase of 7.36%. Both the two major markets and the three major business revenues have achieved year-on-year growth. In the 5G field, in 2022, the company’s 5G base station shipments and 5G core network shipments will average the second in the world. In optical transmission, the OTN cross-connect market share in 2022 ranks the top two globally, and the shipment volume of 200G ports ranks the top two globally. In the field of fixed network access, the accumulated shipments of FTTR solutions exceeded 500,000 sets.
The shipment volume is the top two in the country; the shipment volume of PON OLT and 10G PON is the top two in the world.
3.7 Q123 Other Dynamics of Equipment Manufacturers
In the 2022 Ranking of Global 5G Network Suppliers, Huawei Ranks Number One
According to the latest Dell’Oro report, the top mobile core network suppliers in the world in 2022 are Huawei, Ericsson, Nokia, and ZTE. In addition, Huawei was ahead of Ericsson last year in the world’s top 5G mobile core network supply letter, ZTE, and Nokia.
Nokia, Ericsson Scale up Indian Telecom Equipment Manufacturing
Nokia has announced that it will expand PON OLT manufacturing at its Sriperumbudur plant in southern India to meet the growing demand for high-speed broadband domestically and internationally. A few months ago, Ericsson announced that it would expand its production capacity and operations at its Pune plant in western India with its partner Jabil to cope with India’s 5G network deployment.
– ADTRAN Appoints Uli Dopfer as New Chief Financial Officer
– Ericsson Plans to Cut About 1,400 Jobs in Sweden as Demand for 5G Equipment Slows
– Nokia, Antina Win New 10-year 5G Deal in Singapore
– Samsung Becomes a 5G Core Network Supplier for Japanese Telecom Operator KDD1, Nokia, – DOCOMO, and NTT Showcase 6G Progress at MWC 23
– China Unicom and Huawei Jointly Built the Country’s Largest 400G OTN Experimental Network in Zhejiang
– Windstream Announces Completion of Removal of All Huawei Network Equipment
– MTN Deploys EXFO Advanced Topology Solutions in 14 African Countries
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Chapter 4 Status Analysis of the Global Optical Components Market
4.1 Global Optical Components Market Analysis and Forecast
4.2 Foreign Listed Optical Device Manufacturers: Began to Be Affected by Customer Inventory Adjustments
4.3 The Average Gross Profit Margin of Optical Device Manufacturers Continues to Decline
4.4 The Losses of Foreign-Listed Optical Device Manufacturers Intensified
4.1 Global Optical Components Market Analysis and Forecast
Optimistic Outlook for the Global Optical Device Market： In 2022, driven by the construction of foreign data centers, the deployment of optical fiber broadband in Europe and the United States, and the upgrade of telecommunications transmission networks, the global optical device market will achieve double-digit growth under the challenge of tightening the supply chain. After looking forward to the era of the epidemic, although there are still challenges in the global supply chain, inflation is soaring, and international political uncertainty persists, the global digital transformation is accelerating and will continue to promote rapid Internet traffic.
In terms of the Data Communication Market: in the next five years, the expansion of cloud computing applications and the surge of artificial intelligence workloads will drive the sector to grow at a double-digit compound annual growth rate.
In the Telecom Application Market: Telecom and cloud service providers worldwide are upgrading IP backbone networks to meet traffic growth.
Wireless Fronthaul and Mid-backhaul: The first wave of 5G deployment peaks in advanced markets such as China, the United States, Japan, South Korea, and Europe has come to an end, 5G investment is expected to slow down in the next two to three years, but the next wave of wireless investment peak is expected to start again with the arrival of 6G.
Fiber Access: Global service providers continue to invest in fiber-optic broadband access networks with unabated enthusiasm. North America and Europe are gradually increasing 10G PON deployment driven by government-funded projects, and FTTH infrastructure construction is gaining momentum in most countries. Regarding next-generation PON, 25G PON solutions have been commercialized; 50G PON has been standardized and is expected to be deployed for the first time in 2024 or 2025; research and development of 100G PON is in progress. Therefore, the outlook for the FTTx PON market in the next five years is optimistic.
4.2 Foreign Listed Optical Device Manufacturers: Began to Be Affected by Customer Inventory Adjustments
Overall Performance： According to the financial forecasts of various manufacturers and analysts’ predictions, in Q123, the overall revenue of the four major foreign listed optical device and module manufacturers (excluding Fabrinet) increased by 38.2% year-on-year (including the contribution from the acquisition of Coherent and Lumentum). Emcore continues to surge In addition to the decline, Lumentum declined slightly, and the remaining two are expected to grow.
Impact of Mergers and Acquisitions on Revenue： Coherent, Lumentum, and Emcore all completed acquisitions during Q322 and have since consolidated revenues from the acquired businesses.
Coherent： The integration is progressing very well, with momentum building and results continuing to be delivered. Aware of possible deceleration in 1H23 world economies and some of the company’s end markets.
Lumentum： Due to the inventory adjustment of major customers, Lumentum expects the 2023 fiscal year Revenue in the third quarter (Q123) will be between US$380 million and US$384 million, which is lower than the company’s previous forecast of US$430 million to US$460 million. According to industry analysts, the customer seems to be Ciena. Last month, Ciena reported backlogs well above historical levels and announced plans to begin efforts to reduce inventory.
AOl: CATV demand continues to be strong. The sale of the Continental manufacturing facility, among other assets, is ongoing, and the company continues progressing with required regulatory approvals. It continues to expect the transaction to close in 2023.
Emcore: Broadband business continues to shrink; in the transition of Emcore into a larger and more profitable inertial navigation provider in the A&D market.
4.3 The Average Gross Profit Margin of Optical Device Manufacturers Continues to Decline
In the fourth quarter of 2022, listed optical device manufacturers’ average gross profit margin was 25.9%, down 1.1 percentage points from the previous quarter and 4.9 percentage points from last year.
The average gross profit margin of 4 foreign companies was 21.2%, a month-on-month decline of 2.2 percentage points, a year-on-year decrease of 13.0 percentage points; the average gross profit margin of the five domestic companies was 29.6%, a month-on-month decrease of 0.1 percentage points, a year-on-year increase of 1.5 percentage points.
The decline in the gross profit margin of foreign optical device manufacturers is mainly due to the adverse effects of merger and acquisition integration expenses and supply chain challenges.
4.4 The Losses of Foreign-Listed Optical Device Manufacturers Intensified
The average net profit margin of listed optical device manufacturers in the fourth quarter of 2022 is -2.0%, down 0.7 percentage points month-on-month and 9.4 percentage points year-on-year.
The average net profit rate of the four foreign companies was -22.3%, an increase of 1.8 percentage points from the previous month and a decrease of 22.3 percentage points year-on-year; the average net profit rate of the five domestic companies was 14.3%, a decrease of 2.6 percentage points from the previous month points, an increase of 0.9 percentage points year-on-year.
In the fourth quarter of 2022, several foreign optical device manufacturers will suffer net losses Intensified, mainly due to costs arising from restructuring charges and supply chain tightening. In contrast, the net profit rate of domestically listed optical device manufacturers is relatively stable.
Chapter 5 Analysis of the Status Quo of the Global Optical Fiber and Cable Market
5.1 Q123 Overseas Optical Fiber Factory Revenue Growth Slows Down
5.2 From January to February 2023, China’s Optical Cable Output will Drop, and Exports will Still Increase Significantly
5.3 Q123 Other Dynamics of Optical Fiber and Cable Market
5.1 Q123 Overseas Optical Fiber Factory Revenue Growth Slows Down
Explanation: 1. Yen to USD and RMB to USD are converted at constant exchange rates; 2. Domestic companies such as Hengtong and Zhongtian are not included in the statistics because they do not publish their business data in the first and third quarters; 3. Several large companies After the business reorganization of the factory, optical fiber and cable no longer publish data separately. Hence, the data in the figure includes the data of the department where the optical fiber and cable business is located, not pure optical fiber and cable revenue.
Overall: In the first quarter of 2023, the total revenue of the communication business (including the optical fiber and cable business) of the four foreign optical fiber and cable companies is approximately US$2.253 billion, a year-on-year increase of 5.8%, and the growth rate continue to slow down. Reasons include the slowdown in customer projects, supply constraints, and the impact of exchange rate movements.
Corning： The quarter-on-quarter decline in revenue was mainly due to the slowdown in the progress of customer projects; at this stage, the market is still in the early stages of a multi-year build-out cycle driven by broadband, 5G densification and cloud computing, and fiber optic cable demand remain particularly strong.
Furukawa: Lowered its revenue forecast for FY22 due to foreign exchange impacts (the appreciation of the yen compared to previous forecasts) and possible delays in network projects in its home market of Japan due to semiconductor procurement difficulties. Fiber optic cable demand in the Americas will remain strong. It has improved the productivity of fiber optic cable factories in North America; further incorporated the soaring prices of raw materials and materials into the selling price.
Fujikura: Slightly lowered its revenue forecast for FY22, but the company said that data center and FTTx market demand drove revenue growth; the impact of helium shortage was also mitigated due to improved production rates.
Sumitomo: Revenue may be slightly lower than expected due to foreign exchange effects.
5.2 From January to February 2023, China’s Optical Cable Output will Drop, and Exports will Still Increase Significantly
According to Statistics from The National Bureau of Statistics:
From January to February 2023, the national optical cable production will decrease by 8% year-on-year. According to data from the National Bureau of Statistics, from January to February 2023, the cumulative output of optical cables nationwide was 42.323 million core kilometers, a year-on-year decrease of 8.0%. On the other hand, customs data show that from January to February 2023, my country’s optical rod exports were 364.24 tons, a year-on-year increase of 30%; optical cable exports were 6,671,400 kilometers, a year-on-year increase of 297%; optical fiber and cable exports were 3,665 tons, a year-on-year increase of 112%. The export volume of optical fiber has exceeded 1,000 tons for 10 consecutive months, and overseas demand is still strong.
5.3 Q123 Other Dynamics of Optical Fiber and Cable Market
Zhejiang Mobile Launched a Special Optical Cable Procurement Project for the Transmission Network Within the Red Line Of the High-speed Rail
On March 29, China Mobile Zhejiang Company issued a tender announcement for the procurement project of special optical cables for the transmission network within the red line of the high-speed rail from 2023 to 2025. This project plans to purchase special optical cables for the transmission network within the red line of the high-speed railway from 2023 to 2025, with a scale of 1790 skin length kilometers. 2 units won the bid, the first place won 70% of the bid, and the second place won 30% of the bid.
– China and Cambodia will Promote Infrastructure Cooperation Such As Power Optical Cables and Submarine Cables
– Zhongtian Technology’s New Submarine Cable Business Order is About 2.118 Billion Yuan
– Zhongtian Technology Once Again Announced the Termination of the Spin-off and Listing Plan of ZTT Submarine Cable
– Break the Foreign Monopoly! FiberHome Optical Cable Technology Helps the Communication Construction of Baihe Beach Power Transmission Project
– Corning Opens Optical Cable Manufacturing Campus in North Carolina
– CommScope Announces Expansion of Fiber Optic Cable Production to Help Rural Broadband Build-out
– OFS Announced that It has Joined Terabit BiDi MSA
Chapter 6 Major Restructuring and M&A Cases in the Optical Communications Market
6.1 187 Global Data Center M&A Transactions in 2022
6.2 MACOM Acquires OMMIC SAS and Linearizer
6.3 Q123 Other Mergers and Acquisitions in the Communications Industry
6.1 187 Global Data Center M&A Transactions in 2022
In 2022, there will be 187 completed data center M&A transactions worldwide, with a total transaction value of $48 billion, slightly lower than the record high of $49 billion in 2021. Over the past seven years, the total value of data center M&A transactions has exceeded $200 billion, nearly half of which occurred in the past two years.
Notable Trend: Private Equity Influx into the Market
In 2020, private equity accounted for 55% of the value of completed deals, rising to 66% in 2021 and 91% in 2022. Private equity funding has grown by an average of 50% annually since 2018, reaching $44 billion in 2022.
Large Data Center M&A Transactions
- KKR and Global Investment Partners to Acquire CyrusOne for $15 Billion
- Digital Bridge acquires Switch for $11 billion
- American Tower acquires CoreSite for $10.1 billion
- Blackstone acquires QTS Realty for $10 billion
- Digital Realty acquires lnterxion for $8.4 billion
- Digital Realty to acquire DuPont Fabros for $7.6 billion
- Equinix v buys Telecity for $3.8 billion
- Equinix buys Verizon’s data centers for $3.6 billion
- China’s Jiangsu Shagang Group buys Global Switch for more than $8 billion
6.2 MACOM Acquires OMMIC SAS and Linearizer
MACOM Acquires OMMIC SAS Assets and Business
February 2, 2023 – MACOM acquires French semiconductor manufacturer OMMICSAS for 38.5 million euros. According to MACOM, the acquisition of OMMIC is expected to allow the company to further strengthen its focus on the European market, expand its wafer production capacity, and expand its product offering to higher millimeter-wave frequencies.
OMMlC is a semiconductor manufacturer with expertise in wafer fabrication, epitaxial growth, and Monolithic Microwave Integrated Circuit (MMIC) processing and design. The transaction is expected to close in the second quarter of MACOM’s fiscal year 2023, subject to regulatory approvals and customary closing conditions.
MACOM Acquires Linearizer
March 6, 2023 – MACOM announced the acquisition of Linearizer Communications Group. This acquisition strengthens MACOM’s component and subsystem design expertise in target markets and is in line with the company’s long-term growth strategy. Linearizer specializes in nonlinear microwave predistortion for terrestrial, avionics and space-based applications, as well as high-performance microwave photonic solutions for industrial and defense markets.
6.3 Q123 Other Mergers and Acquisitions in the Communications Industry
L3Harris Completes $2 Billion Acquisition of Viasat Link 16 Assets
L3Harris Technologies completed its $1.96 billion acquisition of Viasat’s tactical data link business, which is expected to better position the 10th-largest defense contractor for orders related to the Pentagon’s Joint All-Domain Command and Control program.
Amphenol Completes Acquisition of CMR’s Proposed RFS Business
Headquartered in France, with manufacturing sites in Tunisia, China and India, CMR produces cable assemblies and interconnect components for the composite industrial market, especially for heavy-duty vehicle engine applications, with annual sales of approximately $75 million. Headquartered in Meriden, Connecticut, RFS designs and manufactures RF, hybrid power and fiber optic cables for customers in North America and base station antennas for customers worldwide in the mobile networking market.
– Indie Semiconductor Announces Acquisition of Silicon Radar Gmbh in Germany
– Lidar Makers Ouster and Velodyne Complete ‘Merger of Equals’
– Hengtong Optoelectronics Completed the Acquisition of Huahai Communication’s Equity Delivery Holding Ratio Reached 93%
– Tsinghua Unigroup Acquires 49% Equity of H3C to Achieve 100% Equity Holding
– Jio Plans to Acquire Mimosa’s FWA Business for US$60 Million
– Tata Acquires North American Service Provider The Switch
– Microsoft Acquires DPU Startup Fungible to Bolster Data Center Infrastructure
– HPE Announces Acquisition of Athonet for Private Wireless Networking Capabilities
– Keysight Acquires Cliosoft to Further Expand Its EDA Software Product Line
– US Fiber Service Provider lmOn to Acquire FiberComm
– US Fiber Service Provider Archtop Fiber Acquires Hancock Telephone
– Ziply Fiber Acquires Fiber Optic Internet and Fixed Wireless Internet Provider Ptera
– Everest Infrastructure Partners Acquires CTG Wireless Tower Portfolio
– T-Mobile to Acquire Mint Mobile and Ultra Mobile
Chapter 7 New Products and New Technologies
7.1 Terabit BiDi MSA Releases New Specifications
7.2 Five Companies Release Next-generation Coherent Solutions
7.3 New Products and New Technologies—System Equipment & Solutions
7.4 New Products and New Technologies—Live Network Test/Multi-Vendor Demonstration
7.5 New Products and New Technologies—Test/Production Equipment
7.6 New Products and New Technologies—Passive Components, Fiber Optic Cables
7.1 Terabit BiDi MSA Releases New Specifications
Terabit BiDi MSA Releases 800G and 1.6T Optical Interface Specifications
Terabit BiDi MSA (Muli-Source Agreement, multi-source agreement) organization released the 1.0 optical specification of 800Gb/s and 1.6Tbls optical interface based on 70m OM4 multimode fiber (MMF) (please click the link at the end of the article to download the specification). The MSA specification utilizes the widely adopted dual-wavelength bidirectional transmission technology. This provides an upgrade path for massively deployed parallel MMF cabling infrastructure. The specification builds on the 100Gbls Ethernet MMF specification.
The Terabit BiDi MSA specification addresses short-reach applications, including critical high-capacity interconnects between switches in modern data centers. Terabit BiDi MSA participants are responding to industry needs for low-cost and low-power solutions in 800GbIs and 1.6Tb/s packages, which can be met by bidirectional MMF technology.
To download the specification, please click: https://terabit-bidi-msa.com/assets/files/Terabit_BiDi_MSA_Technical_Specification_rev1p0.pdf
Open XR Forum Successfully Completes Point-to-Point Trial of 400G Pluggable Optics
March 7, 2023 – The Open XR Forum (Open XR Forum) today announced the successful demonstration of long-distance point-to-point transmission over 1400 km at 400Gb/s using 16QAM modulation between QSFP56-DD coherent transceivers, And the error-free performance of 300Gb/s using 8QAM modulation on a transmission span of 2495 kilometers. In addition to demonstrating equal or better long-range performance than current state-of-the-art transceivers, this is the first public demonstration of an advanced management approach that enables the management and control of optical transceiver functions independently of the host device.
Details and results of this demonstration can be found in the Open XR Forum report “P2P (Point-to-Point) Performance and Host Independent Management
Proof of Concept Demonstration”.
Report link: https://static1.squarespace.com/static/60ad0ce2e5c6877a569c6a59/t/64066d46bd68a07e78e74864/1678142792666/OX
7.2 Five Companies Release Next-generation Coherent Solutions
Nokia’s Next-generation Coherent Optical Engine PSE-6s Can Reduce Network Power Consumption by 60%
The engine can reduce network power consumption by 60%. PSE-6s supports the efficient provision of high-speed services, including 800GE, over distances of 2000 km and above.
Ciena Launches Industry’s First 1.6Tb/s Coherent Optical Solution WaveLogic 6
Optimized for the high-capacity transport required for next-generation routed data paths and associated wholesale services, WaveLogic 6 will support up to 1.6Tb/s single-carrier wavelengths required for metro ROADM deployments, supporting 800Gb/s on the longest link, supporting energy-efficient 800G pluggable over a distance of 1000 km.
Fujitsu Launches 1FINITY Hyper Optical System
The data rate of 1FINITY meta-optical system on a single wavelength is 1.2Tbps, which will be upgraded to 1.6Tbps in the future. This next-generation system employs a DSP with the latest semiconductor process and liquid cooling technology, which doubles the cooling capacity of conventional technology.
Infinera Launches Next-generation 1.2TICE7 Light Engine and Expands Its GX Compact Modular Platform
The GX platform and ICE7 optical engine will reduce cost per bit by 30% and power per bit by 60%. ICE7’s 800G-based transmission can reach 3,000 kilometers, which is more than three times the coverage of existing technologies and covers more than 85% of network links.
Infinera Launches High-performance Coherent Photonic System and Coherent Pluggable Optical Engine
The new TROSA series is based on a unique monolithic integrated PIC, three products ICTR32, ICTR64 and ICTR140, its nominal baud rate is 32Gbaud, 64Gbaud and 140Gbaud respectively. The ICE-X pluggable module family includes 100G XR, 400G XR, 400GZR+ and 800G ZR/ZR+ modules.
NEL Begins Shipping 140 Gbaud High-Performance Coherent DSP
The new 140Gbaud digital signal processing LSI (DSP) realizes the world’s largest capacity of 1.2Tbit/s per wavelength. NEL plans to release products in the second half of 2023. The ExaSPEEDGAIA DSP cuts the power consumption per bit in half while doubling the baud rate compared to earlier products.
7.3 New Products and New Technologies—System Equipment & Solutions
Huawei Released the Industry’s First 2000Mbps All-optical Networking Product
Huawei FTTR Xingguang B30 series has three major advantages of intelligent connection, intelligent optimization, and intelligent simplicity. Based on the C-WAN architecture with deep integration of optical + Wi-Fi, it creates a high-quality network experience for small and micro enterprises and helps small and medium-sized enterprises to digitally transform. It will be applied to China Mobile’s e-enterprise network exclusive plan.
Huawei Released Three Major Solutions
Huawei released FTTR all-optical home starlight F30 (the industry’s first all-optical home networking product based on C-WAN architecture), the industry’s first commercial 50G PON, and metro pooling WDM three new products and solutions to help operators Build an end-to-end green all-optical network.
Huawei Released the Industry’s First End-to-end OSU Product Portfolio
The product portfolio includes fully upgraded optical transmission equipment Huawei OptiXtrans E9600/E6600 series, optical access equipment Huawei OptiXaccess EA5800 series, and newly released industrial-grade CPE equipment Huawei
OptiXstar E810 and Huawei OptiXstar T823E-T, an intelligent timing IoT gateway, realize the end-to-end OSU original hard pipeline from the backbone layer to the access layer, and realize the unified deployment and management of OSU in the entire network through the iMaster NCE platform.
Huawei Released the Industry’s First 50G POL Prototype
Including uplink and downlink symmetrical 50G PON OLT and optical terminals, upgrading the campus network from 10G PON to 50G PON.
Ekinops Launches New CFP2-Based 400G Transport Solution
Ekinops announces the new PM_400FR05-C2A pluggable module for the Ekinops360 WDM optical transmission system. The new line card is Ekinops’ first coherent module based on a 400G pluggable line interface, which provides a lower-cost, lower-power coherent solution compared to high-performance embedded optics.
ZTE Releases New Series of FTTR Family and Business Enterprise Scenarios
Including FTTR master gateway G8615 and slave gateway G1600 in home scenarios, FTTR master gateway G100 and slave gateway G1660 in commercial and enterprise scenarios. Among them, the main gateway G8615 supports uplink and downlink symmetric 10G transmission, and the uplink interface is XGS-PON/10GEPON. It is the industry’s first FTTR device that supports XGS-PON technology.
ZTE Releases 50G PON810G GPON& GPON Three-mode Combo PON Product
The solution adopts an independent wavelength superposition mechanism, which can realize the sharing of ODN and platform of GPON, 10G GPON and 50G PON technologies at the same time, and solve the problems of high construction cost, large equipment room space occupation and optical fiber in the process of evolution from GPON to 10G GPON and future to 50GPON. Complicated wiring and difficult operation and maintenance. The program inherits and develops
The Combo PON concept is another innovation in the smooth evolution of PON networks to 50GPON.
Nokia Launches Beacon 10, A Wi-Fi 6E Gateway for Gigabit Networks
This is its first Wi-Fi 6E-enabled gateway, which provides seamless, high-capacity mesh networking. The Beacon 10 is a true tri-band device that can deliver 10Gbps of Wi-Fi throughput.
ADTRAN Launched SDX6330 10Gbit/s Combo PON Fiber Optic Access Platform
The new open and disaggregated solution provides the highest port density in the industry and is the first optical terminal (OLT) with integrated 400Gbit/s uplink. It will enable operators to accelerate fiber deployment and easily scale their networks to support dense urban, suburban and rural deployments.
Thernity Networks Launches New Combo PON OLT
The new product can provide up to 16 XGS-PON ports, 8 CPON ports, 16 GPON ports or a combination thereof, as well as 2 100GbE ports and 6 10/25GbE ports to provide a switching capacity of 800Gbps.
7.4 New Products and New Technologies—Live Network Test/Multi-Vendor Demonstration
ZTE and China Telecom Complete the Industry’s First Live Network Test Based on Commercial M-OTN/OSU Equipment
The test realized the interoperability verification of the basic functions of OSU in ZTE’s domain and between ZTE and other CPE manufacturers, and opened the first friendly customer Ethernet private line service carried by OSU, which verified the advancement of OSU small particle technology and the maturity of corresponding products.
China Telecom and FiberHome Completed the 3820km Transmission Verification of The Single-wavelength 400Gbit/s DWDM System on The Live Network
The transmission capacity of this test reached 16Tbit/s, which greatly refreshed the industry transmission record of the existing network 400Gbit/s DWDM system, marking an important step forward for the backbone 400Gbit/s DWDM system to scale commercial use.
Nokia and GlobalConnect Achieve Single-Wavelength 1.2 Tb/s Coherent Transmission Record
Nokia said it broke two optical transport records in field trials of the GlobalConnect real-time optical network in Europe. The demonstration used Nokia’s sixth-generation hypercoherent photonic services engine, the PSE-6s, to achieve 1.2Tbl/s over metro (118km) and 800Gb/s over long-haul (2,019km), both A single wavelength is used.
Corning and Infinera Achieve 2400 km 400G Transmission Record
The trial achieved 400 Gigabit per second (400G) single-wavelength transmission across 2,400 kilometers of Corning TXF fiber using the Infinera ICE-X 400G QSFP-DD smart coherent pluggable solution. The transmission distance for this test was double that of the previous record.
Arelion and Infinera Set New Benchmarks for 400G ZR+ Parts
In a live network, a record transmission of 400 gigabits per second (400 Gb/s) wavelength was achieved over 1,800 kilometers of SMF-28 fiber using QSFP-DD pluggable coherent transceivers. This milestone point-to-point optical network is enabled by utilizing Infinera’s ICE-400GZR+ smart pluggable coherent transceivers.
ADTRAN Achieves Single-carrier 800G Long-distance Transmission Record
ADTRAN achieved a record 2,220 km of error-free transmission in NYSERNet’s production network. The test routes through 14 routing and selection flexible mesh ROADMs, including a total of 28 WSSs. ADTRAN achieved this result by utilizing Acacia’s 140GBd DSP technology using continuous symbol rate tuning and probabilistic constellation shaping provided by Acacia Coherent Interconnect Module 8 (CIM8).
ADTRAN Brings Its Latest Coherent Innovations to OFCnet Multi-Vendor Demonstration
The demonstration shows how the ADTRAN FSP3000 Open Line System (OLS) can bring new levels of flexibility to optical networks by enabling optimized, customized spectrum services. The FSP3000 DCI OLS also played a key role in OFC’s OIF 400ZR demonstration.
ADTRAN Showcases Coherent 100ZR QSFP28 Demonstration
ADTRAN announced a successful demonstration of its coherent 100ZR technology, demonstrating the industry’s first real-time demonstration of 100ZR QSFP28 pluggable operation over a DWDM metro ring.
Telefonica Partners with Nokia to Test 25G PON Technology
The trial is the first in Spain to demonstrate symmetrical speeds of 20Gbps, showing that state-of-the-art 25G PON can coexist with Telefónica’s existing GPON solution.
– Telekom Malaysia and ZTE Cooperate to Explore 50G PON Development Opportunities
– Finnish Operator Lounea Cooperates with Huawei to Strengthen 50G PON Application Cooperation
7.5 New Products and New Technologies—Test/Production Equipment
Keysight and McGill University Demonstrate 10km 1.6Tbps O-band Coherent Transmission
The distributed feedback laser of the carrier and the local oscillator was used in cooperation to achieve a record transmission rate of 1.2Tbps and 1.6Tbps at a distance of 10 kilometers. Keysight’s advanced arbitrary waveform generator M8199B provided a strong guarantee for the success of this demonstration.
Keysight and Several Manufacturers Jointly Demonstrate Single-wavelength 200G and Other New Product Solutions
Keysight demonstrated a comprehensive test solution from the physical layer to the network layer, as well as test solutions for the most cutting-edge interconnect technologies in optical transport and data centers: PIC integrated photonics, 800G Gen 2 and 1.6T optical ports based on 224Gbps And electric port test, over 160GBaud coherent optical transmission, 800G Ethernet layer 1.5 and above network verification, physical interconnection test of 110GHz optical communication devices and chips and production test of 400G/800G optical modules.
Keysight and Sources Jointly Demonstrate Single-Wavelength 200G PAM4 EML Laser Performance
This test is based on the test platform built by Keysight M8199A arbitrary waveform generator and DCA-X N1032A sampling oscilloscope, which can provide 200Gb/s PAM4 signal and test the photoelectric eye diagram of the signal. Source Photonics’ single-wavelength 200G PAM4 EML showed excellent optical eye diagram characteristics in this joint test, laying a solid foundation for the smooth development of subsequent 1.6T optical modules.
Multilane Cooperates with Many Well-known Manufacturers to Help 800G Ecological Test
Multilane, together with a number of well-known manufacturers, exhibited 800G interoperability verification and integrated jitter and noise bit error meter ML4079EN and test suite SITOL, as well as many advanced test and measurement solutions.
Anritsu and Kyocera Successfully Complete the World’s First PCI Express 5.0 Optical Signal Transmission Test
Anritsu and Kyocera successfully completed PCIExpress 5.0 (PCle® 5.0) optical transmission testing using Anritsu MP1900A signal quality analyzer and Kyocera’s on-board optical modules. This is the first test in the world where A uses an endpoint add-in card (AIC) to convert a PCle™ 5.0 (32Gbps transmission speed) electrical signal into an optical signal.
VIAVI Releases New High Speed Ethernet (HSE) Test Platform
HSE provides integrated circuit, module and network system companies with high-speed equipment for testing up to 128x800G. VIAVI also showcased the recently announced 800G Ethernet Technology Consortium (ETC) capabilities of the ONT 800G FLEX XPM module, which can support the testing needs of hyperscale enterprises, data centers and related applications.
VIAVI and InnoLight Demonstrate New Performance of Coherent Transceivers
InnoLight used VIAMI ONT 800G Flex DCO test equipment to demonstrate the full capabilities of its CFP2 and QSFP-DD based 400GZR(+) modules, including full interoperability and data integrity for real-time 400Gb traffic.
EXFO’s Next-Generation Solutions Help Data Center Providers Improve Testing Capabilities
The solutions include the next-generation 800G test solution FTBx-88800 series modules, fully automatic photocurrent modules for PIC tests, the latest FTTx broadband access test products, and field test and data center connection test solutions.
Coherent Introduces New Programmable Optical Processor and Optical Spectrum Analyzer
The WaveShaper® 1000B and 4000B are programmable optical processors capable of generating filter shapes of arbitrary attenuation and phase with resolution bandwidths up to 10GHz and filter update rates exceeding 10Hz. The WaveAnalyzer 400A/Super-C is an optical spectrum analyzer operating in the ultra-wide C-band with an optical resolution bandwidth of 50OMHz (4 pm), and can complete two complete measurement scans per second.
Coherent Introduces An Embedded Ultra-wideband Telemetry Module for Monitoring the Performance of C+L Band Optical Transmission Systems
Coherent’s new product UWB-OCM is based on a tunable filter with a monitoring spectrum exceeding 12THz, which can easily cover the full C+L band of a new generation of reconfigurable optical add-drop multiplexer (ROADM) systems.
Japan’s Seiko Technology Launched A Pure Four-corner Pressurized Program-controlled Grinding Machine SFP-560A3C
Japan’s Seiko Technology has launched a new generation of pure four-corner pressurized program-controlled grinding machine SFP-560A3C with communication functions, which is suitable for automatic grinding production lines.
7.6 New Products and New Technologies—Passive Components, Fiber Optic Cables
SENKO and Anritsu Jointly Demonstrate CPO Network and Test Solutions
SENKO and Anritsu demonstrate a co-packaged optical device network test setup using the SN-MT connector solution. The transceiver used in the demonstration is DR4+, and the transmission uses forward error correction. Demonstration using multiple sets of SN-MT connectors to measure 400G DR4+ optical performance.
Accelink Technology Launched the First Independent Flexible Grid WSS in China
Accelink Technology and China Unicom Research Institute launched the first independent FlexWave Single 1*9 and 1*4WSS in China. The key technical indicators of the product and its performance in the ROADM network have been fully verified by both parties.
Lingyunguang Launched the 100GHz Ultra-wideband Linear Amplifier SHF T850B
This product can provide ultra-bandwidth amplification performance with 3dB bandwidth from <100khz to >100GHz, and can fully support the amplification requirements of NRZ and PAM4 signals under 100GBaud.
HUBER+ SUHNER POLATIS 576 Ultra-Large Matrix Optical Switch Debuts
POLATIS 576 ultra-large matrix optical switch is designed to provide operators with a large capacity that is 80% higher than similar solutions in the market.
Letas Released A Male-Female Compatible MT to MPO Adapter to Boost On-Board Optics
Product advantages: 1) Both male and female MT ferrules are available, and the performance is optimized at the same time. 2) There is no need for tools, only a swing clip to fix the MT ferrule, easy to assemble and disassemble. This product further improves the ecosystem of MT ferrule connectors inside the cabinet, and will strongly promote the MT ferrule to become a must-have connector for internal connections in the cabinet. This MT to MPO adapter has been mass-produced.
Lightas Releases Ultra-miniature MT Multi-fiber Connectors to Boost On-Board Optics
Product advantages: 1. It is almost as long as two MT ferrules, reaching the limit of length; 2. The MT ferrule is pre-relaxed when docking, the damage to the guide pin hole is minimal, and the plugging life is the longest; 3. The insertion loss of the connector is the lowest, and the repeatability of plugging and unplugging is the best, because the ferrule is suspended; 4. There are only two components, and only three steps are needed to complete the connection, and the steps are the most streamlined. This connector is already in mass production.
OFS Develops Multi-core Fiber (MCF) for Its Submarine Fiber Portfolio
OFS has announced the development of multicore optical fibers for its marine portfolio. TeraWave SCUBA 4X Multicore Marine. The fiber adopts four-core space division multiplexing (SDM) technology, which can provide four times the optimal bandwidth in marine applications.
Corning Showcases A Series of New Products at OFC 2023
Corning demonstrated a series of innovative and enhanced technologies, including: Corning MiniXtend optical cable with Flow Ribbon technology; The EDGE Rapid Connect Technology family of solutions that helps hyperscale operators interconnect multiple data centers by 70% faster by eliminating field splicing and multiple cable pulls.
Corning Launches New Ultra-low Loss Optical Fiber Vascade EX2500
Vascade® EX2500 fiber has the lowest attenuation coefficient (0.148dB/km @1550nm typical) among all Corning’s marine fiber products, and it has a large effective area of 125μm2. The EX2500 optical fiber conforms to the ITU-T G.654.B/D/E standard and is an innovative product specially designed for the most challenging ultra-long-distance and large-capacity transmission network.
Prysmian Sirocco HD Fiber Optic Cable Series Expansion New Product Has 864 Optical Fibers
Prysmian’s Sirocco HD microduct fiber optic cable series has added a new product member, the 864f fiber optic cable. The new cable has 864 fibers with a diameter of 11.0mm, a fiber density of 9.1 fibers per square millimeter, and can be deployed in a 13mm duct.
Chapter 8 Global Optical Communication Market Forecast
8.1 Data Center/5G/FTTH Investment Forecast
8.2 1H23 Equipment Vendor Revenue Will Maintain High Single-digit Growth
8.3 In 1H23, the Overall Revenue of Major Listed Optical Device Manufacturers Maintained Double-digit Growth
8.4 Optical Fiber and Cable Market: Customer Projects Slow Down But the Overall Supply Is Still In Short Supply
8.1 Data Center/5G/FTTH Investment Forecast
Global Telecom Capex to Fall in 2023
Dell’Oro estimates that global telecom capex is expected to decline at a compound annual growth rate of 2%-3% over the next three years, as positive growth in India is not enough to offset sharp cuts in North American capex.
Global RAN Growth Will Slow Down Over The Next Five Years
After four years of extraordinary growth, the radio access network (RAN) market has reached new record levels, Dell’Oro predicts. At this stage, the 5G journey of the RAN market is transitioning from the expansion stage to the next stage, and the growth rate will slow down in comparison. It is estimated that by 2027, the compound annual growth rate of global RAN outside China will be zero.
5G in the U.S. Will Cool Down in 2023
After several years of heavy spending and customer growth, there are growing signs that the big 5G service providers in the US are preparing for a cooling-off period in 2023. The 5G industry is moving from an investment phase to a phase of seeking return on investment.
U.S Fiber Service Providers Slow Deployment
In early 2023, many fiber service providers lowered their expansion targets for the year. Evercore analysts pointed out that a combination of factors ranging from inflation to sluggish home sales will lead to a cooling of the U.S. fiber broadband industry in 2023. At the same time, several suppliers indicated that, to some extent, they were not seeing the ROI they expected, especially from recent deployments, making them increasingly cautious about future construction plans.
Global Data Center Capital Spending Will Reach $400 Billion in 2027
While macroeconomic factors may hold back near-term data center investment, upcoming data center architectures will spur long-term growth. Dell’Oro predicts that by 2027, global data center capital expenditures are expected to reach $400 billion. Hybrid cloud will bring data center market growth opportunities for hyperscale and enterprise markets.
8.2 1H23 Equipment Vendor Revenue Will Maintain High Single-digit Growth
Judging from the financial forecasts of listed companies and the forecasts of securities analysts, in the first half of 2023, the total revenue of the eight equipment manufacturers is expected to increase by 8.11% annually, and all eight equipment manufacturers will achieve growth. Even if ADTRAN, which has greatly increased its revenue due to the acquisition of ADVA, is removed, the total revenue growth of the remaining seven companies will reach 7.55%.
Judging from the situation reported by equipment manufacturers, the market demand is strong, but supply chain challenges still exist, and the short-term prospects are still full of uncertainties. Operators will continue to reduce assets in response to macroeconomic headwinds while making inventory adjustments. Some equipment manufacturers lowered their revenue forecasts.
8.3 In 1H23, the Overall Revenue of Major Listed Optical Device Manufacturers Maintained Double-digit Growth
In the first half of 2023, the macro economy may slow down, and service providers will be more cautious about capital expenditure; the 5G market cools down, and the growth of the US fiber access market slows down; some customers begin to adjust their inventory. Therefore, at present, listed optical device manufacturers’ revenue forecasts for the first half of the year are relatively conservative.
Coherent’s revenue rose sharply due to acquisitions, and its actual organic growth was around 15%. Lumentum lowered its revenue performance due to inventory adjustments by a major customer. Analysts are optimistic about InnoLight’s performance, possibly because its 800G optical modules continue to increase in volume.
8.4 Optical Fiber and Cable Market: Customer Projects Slow Down But the Overall Supply Is Still In Short Supply
The Progress of Customers Digesting Inventory Projects Slows Down
Fiber optic service providers in the United States have slowed deployment, such as Lumen suspending fiber optic expansion, and AT&T said that progress would slow down. Corning also said customers were digesting inventories.
Long-term Trends and Demand Remain Healthy
– Furukwa and Prysmian said the demand for optical cables in the North American market is strong.
– According to China’s customs data from January to February 2023, the export of optical fiber, cable, and light rods has increased significantly year-on-year, of which the export volume of optical cables has increased by 297% year-on-year, reflecting the shortage of overseas supply.
– Corning opened a new fiber optic cable manufacturing campus in North Carolina, and CommScope also announced the expansion of fiber optic cable production.
Summary and Prediction
In the first quarter of 2023, China Radio and Television will start centralized procurement of IP backbone networks, with an amount close to 600 million yuan; China Telecom will start the centralized procurement of 5G fronthaul WDM color light equipment in 2023, and the demand will double.
In the first quarter of 2023, the total revenue of 7 major foreign-listed equipment manufacturers will increase by 10.9% year-on-year. Market demand is strong, but customers are already making inventory adjustments, and some equipment manufacturers have lowered their revenue forecasts; supply chain challenges still exist.
In the first quarter of 2023, foreign-listed optical device manufacturers said that they had begun to receive the impact of customer inventory adjustments. It is expected that some end markets may slow down.
In 2023, the CAPEX of China’s three major operators will increase by 2.04% annually; 5G investment will decline by about 8%, and computing power network investment will increase by 34% annually. The Ministry of Industry and Information Technology stated it would increase support for computing power infrastructure and forceful computing empowerment.
In 2023, the number of global 5G contracts will rapidly grow, with an estimated increase of 620 million (530 million in 2022). Growth in emerging markets will be very strong in fixed networks, while mature markets such as China will focus on promoting gigabit optical networks.
In the first quarter of 2023, the total revenue of the communication business of the four foreign optical fiber and cable manufacturers increased by 5.8% year-on-year, and the growth rate continued to slow down. Reasons include the slowdown in customer projects, supply constraints, and the impact of exchange rate movements.