OC market tipped to contract

Ovum predicts the global optical components (OC) market is entering a period of contraction, following marginal sequential growth during 1Q11.
The firm notes global sales grew 1% to $1.59 billion (€1.1 billion) in the first quarter, and predicts 2Q revenues could be down by up to 8% sequentially. If the forecast is accurate, it would be the first contraction in the OC market for two years.
Analyst Karen Liu takes the marginal 1Q growth as a sign that the market is slowing, despite revenues for the period being up 27% year-on-year. “The sequential growth of 1% is the smallest since the first quarter of 2009, and the year-on-year growth is the smallest since the last quarter of 2009,” she notes, adding. “This weaker growth is a reflection of the contraction that we believe will come to light in the second quarter.”
Ovum believes the slowdown is mostly due to weak sales of ROADMs and filters, and lower sales of transmission discretes. However, it also notes that key vendors are reporting lower demand from China, which it says is confirmed in its quarterly analysis for optical network (ON) equipment.
“ON sales in China posted a 20% contraction, which pulled down the whole Asia Pacific region,” Liu states.