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Telecom laser market expected to grow in 2003

Posted: 23 Jan 2003 ?? ?Print Version ?Bookmark and Share

Keywords:telecom laser? transponder? asp?

The telecom laser and transponder market stands to grow over 30 percent in 2003, largely due to the continued installation of line cards into existing systems, drawing down inventories, predicted market research firm Strategies Unlimited. However, with dozens of suppliers competing for a share, prices, and margins will remain squeezed for industry participants, they added.

"Traffic is continuing to grow, albeit more slowly, and prices will stabilize enough for revenues in this market to grow beginning in 2003," says Tom Hausken, Optical Communication Components Practice Director at Strategies Unlimited. "But, there is only business for a few key suppliers, plus some additional niche players. The longer it takes to consolidate, the longer will be the pain."

According to the Strategies Unlimited report, the laser market fared better than many other optical components during the current industry downturn. As laser products are installed into systems not only as new systems are installed, but also as new DWDM channels are added to existing systems, laser manufacturers have not experienced the extreme swings seen by manufacturers of fiber-optic cable or optical amplifiers.

Additionally, average selling prices (ASPs) of lasers generally have scaled upwards as the data rate of those lasers increased since higher data rate lasers are expensive to package, while ASPs for many passive optical components have risen only modestly with new generations of systems.

Further, the integration of new features into functional blocks or transponders provides a higher revenue opportunity for many players in the 10Gbps and 40Gbps markets. While their overall penetration into the market is limited, these products sell for higher prices, and also scale well with data rates.

However, the industry remains plagued by inventory buildups that occurred during the initial phase of the industry downturn, explained the market research firm. As of the end of 2002, excess inventories remained for products aimed at the long haul market such as continuous-wave lasers on the ITU grid, thus depressing sales of laser diodes. Products in the best inventory position are metro transceivers and newer products such as WDM lasers.

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