Demand for optical modules and components gained a substantial growth of 30% more in 2010, creating hopes for a promising market ahead. The market boom between 1999 and 2000 is not similar to the present trends, where the sales progressed at a rate of more than 100% per annum.
The difference noted was that there was a vast difference in the progress of reasonable level of networking infrastructure development and component sales. This caused major increase in component inventory after the market crash in 2001.
The market focused on increasing the profitability and decreasing the cost, resulting in considerable improvement in inventory management across the supply chain. Despite the advancement in optical components production, it was still difficult to respond smoothly to the fluctuating need for a range of products. Component suppliers found it difficult to increase the production as the market showed progress in 2010. Demand for certain products increased two to three times during the year, resulting in shortage and increase in inventory by customers. But these hindrances were confined only to certain types of products such as wavelength selective switches (WSS) or 40 Gbps components.
The decline in optical modules and component sales in early 2011 was also confined to certain product types, which was better than the sales in 2010 or had extended lead times. According to the LightCounting report update, there is a very small component inventory throughout the industry.
Detailed report of the optical communications industry is to be provided by LightCounting, which will be published on the company website on September 26, 2011.
Source: http://www.lightcounting.com/