3Q17 Optical Hardware Forecast

On November 21st, Cignal AI issued full optical equipment market share analysis for 3rd quarter 2017 (3Q17). This second report extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 3Q17 along with detailed, up-to-date forecasts. A complete compilation of our 3Q17 market share and forecast analysis is available in both web format as well as .pdf format.

 

We made minor adjustments to our worldwide 2018 and longer-term forecasts; a detailed discussion follows.

Requires Optical Hardware subscription.

3Q17 Optical Hardware Results

Cignal AI has released its 3rd quarter 2017 (3Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.

Summary

Global spending on optical network equipment dropped for a third consecutive quarter, led by a larger than normal seasonal decline in China and weakening trends in EMEA.

  • North American spending increased again quarter-over-quarter, with positive results reported by most vendors.  Spending on Metro WDM continues to grow at the expense of LH WDM.
  • EMEA revenue fell sharply though this was the result of weakness at larger vendors – smaller vendors performed better. As in North America, LH WDM bore the brunt of the decline.
  • Last quarter was the weakest YoY revenue growth recorded in China in over 4 years as momentum from 2Q17 spending failed to continue into the third quarter. Spending trends in the region remain difficult to predict.
  • Revenue in the rest of Asia (RoAPAC) eased following breakout results in India during 2Q17 though spending remains at historically high levels.
  • Quarterly coherent 100G+ port shipments broke 100k units for the first time on a global basis. 100G+ Port shipments in China were flat QoQ and are substantially up YoY

Subscribers to the Optical Hardware report can download an excel file with actual results through 3Q17. This Excel file contains only historical data, and is an interim release. A file with greater detail, including updated forecasts and additional analysis, will be available by November 27th, 2017.

Analysis of the market and its participants during 3Q17 follows.
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ECOC 2017 – China Observations

This is Cignal AI’s second ECOC 2018 brief, focused on news out of China.

Topics include:

  • China Inventory and 2018 Demand
  • Ciena Wavelogic AI Licensing Update
  • China ROADM Deployment Outlook
  • Huawei 100G+ Coherent Technology Roadmap

Our first brief, issued on October 3rd, focused on coherent 100G+ technology updates.

Requires Optical Active Insight subscription.

2Q17 Optical Hardware Forecast

On August 20th, Cignal AI issued full optical equipment market share analysis for 2nd quarter 2017 (2Q17). This second report extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 2Q17 along with detailed, up-to-date forecasts. A complete compilation of our 2Q17 market share and forecast analysis is available in both web format as well as .pdf format.

Excel PDF

 

We made substantial adjustments to our worldwide 2017 forecasts due to ongoing spending weakness in North America and EMEA as well as surprising strength in China; a detailed discussion follows.

Requires Optical Hardware subscription.

2Q17 Optical Hardware Results

Cignal AI has released its 2nd quarter 2017 (2Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.

Summary

Global spending on optical network equipment increased slightly, led by increased spending in China and India.

  • Optical revenue in China is up 13 percent for the first half of 2017 as compared to the same period in 2016. The weak demand reported by component makers is a result of an ongoing inventory correction (primarily at Huawei), rather than a signal of weak end market demand.
  • Huawei and ZTE both reported record shipments of 100G coherent ports in China during the quarter. The companies also showed strong revenue performance in the region.
  • North American spending increased quarter-over-quarter. Consistent with earlier Cignal AI forecasts, North America is experiencing a shift in spending from long haul to metro WDM. Ciena and Cisco are the primary beneficiaries of the double-digit year-over-year growth in NA metro WDM. Both companies grew market share, and Ciena’s North American optical equipment revenue increased by 21 percent year-over-year.
  • Outside of China and Japan, the rest of the Asia Pacific (ROAPAC) countries experienced 20 percent year-over-year growth. This region’s growth was particularly fueled by India’s Reliance Jio, which is purchasing substantial amounts of equipment from Ciena and Nokia as part of an aggressive 4G LTE expansion in the country.
  • EMEA revenue dropped substantially, stemming from sharp declines in spending in the long haul WDM and submarine systems markets. Metro WDM spending remained flat year-over-year.
  • Growth in metro WDM spending is creating greater demand for higher speed coherent ports, which are evolving from 200G to speeds as high as 400G later this year.

Subscribers to the Optical Hardware report can download an excel file with actual results through 2Q17. This Excel file contains only historical data, and is an interim release. A file with greater detail, including updated forecasts and additional analysis, will be available August 25th, 2017.

Report Details Excel

Analysis of the market and its participants during 2Q17 follows.
Requires Optical Hardware subscription.

China ROADM Deployment Outlook

After much of the world already transitioned to all-optically switched ROADM networks, Chinese network operators are preparing to follow suit. Most networks outside of China used optical switching as early as a decade ago, yet China chose to deploy massive electrical OTN switches instead, powered by technology from Huawei and ZTE. But now the writing’s on the wall; electrical switching can no longer scale to the sizes needed by China Mobile and China Telecom, and these operators are now moving forward with ROADM optical switching.

This transition will unfold with a different timeline than Cignal AI initially anticipated and we have updated our position on China’s 2017 ROADM deployment. Instead of pursing rapid deployment, Chinese operators will take a more conservative stand by minimizing the deployment of conventional ROADM architectures during 2017 and 2018.

In this report, Cignal AI examines what technology China has deployed to date, outlines changes in ROADM architectures, and explores the ripple impact on the optical component and semiconductor supply chain.
Requires Optical Active Insight subscription.

1Q17 Optical Hardware Forecast

On June 15th, Cignal AI issued full optical equipment market share analysis for 1st quarter 2017 (1Q17). This second report extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 1Q17 along with detailed, up-to-date forecasts. A compilation of our latest analysis is also available in both web format as well as .pdf.

Excel PDF

 

We made some material adjustments to our forecasts for 2017 in North America and China; a detailed discussion follows.

Requires Optical Hardware subscription.

1Q17 Optical Hardware Results

Cignal AI has released its 1st quarter 2017 (1Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.

Summary

Global spending on optical network equipment eased worldwide, led by a double digit decline in North America.

  • Ciena remains the best performing company in North America (NA) as it remained immune to sharp pullbacks in long haul WDM (LH WDM) spending. NA spending continues to stall as a result of a technology transition from long haul to metro WDM capex, as well as materially lower results from Infinera – the second largest vendor in the region.
  • European (EMEA) spending was weaker although some vendors reported good results compared with 1Q16.
  • Optical equipment spending growth in China stalled as uncertainty about the outlook for 2017 rippled through the industry. Huawei remains very confident growth will return in 2H17 but its component suppliers grow increasingly negative as they receive mixed messages from the supply chain.
  • Metro WDM growth has yet to appear in order to offset sharp declines in LH WDM spending. This will change in 2017 as multiple vendors bring the technology to market. Coriant, Infinera, and Nokia have been impacted by this trend.
  • Subscribers to the Optical Hardware report can download an excel file with actual results through 1Q17. This Excel file contains only historical data, and it is an interim release. A subsequent file with updated forecasts and additional analysis will be available June 19, 2017.
Report Details Excel

Detailed analysis of the market and its participants during 1Q17 follows.
Requires Optical Hardware subscription.

Investor Call – OFC 2017 Takeaways

Andrew Schmitt provided key OFC 2017 takeaways during an investor call hosted by Troy Jensen of Piper Jaffray. Sixty-seven investors participated. Topics of interest included:

  • Impact of Ciena’s Wavelogic AI DSP Licensing
  • Outlook for Coherent Port Shipments in China During 2017
  • Market Outlook for CFP2-ACO/DCO and QSFP28 Markets
  • Potential Vertical Integration by Intel or InPhi
  • Timing of Metro Coherent and ROADM deployment in China
  • Chinese SARFT Capex Guidance
  • Roadmap for 400G and 600G Coherent
  • Observations on Infinera, Ciena, Acacia, Oclaro, and Neophotonics

Following is a summary of the key takeaways, as well as a full transcript of the discussion. Cignal AI clients can also listen to an audio replay.

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Requires Optical Active Insight subscription.

4Q16 Optical Hardware Forecast

On February 27th, Cignal AI issued full optical equipment market share analysis for 4th quarter 2016 (4Q16). This second report, issued on March 9th, extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 4Q16 along with detailed, up-to-date forecasts. A compilation of our latest analysis is also available in both web format as well as .pdf.

Excel PDF

 

There were some minor changes to our forecast during 4Q16:

  • Updated LH v Metro WDM mix in Japan to adjust for 100G rollout
  • Adjusted SLTE forecast to moderate declines in later years
  • Slight changes to EMEA and NA for 2017 based on CY16 results.

A detailed discussion of our near and long term forecasts follows.

Requires Optical Hardware subscription.

4Q16 Optical Hardware Results

Cignal AI has released its 4th quarter 2016 (4Q16) optical hardware market share analysis, which includes a summary of revenue results for the quarter as well as the entire calendar year 2016 (CY16).

Summary

Global spending on optical network equipment increased in all global regions except North America during CY16.

  • Nokia and ADVA were the only vendors recording significant gains in North America in a challenging 2016 environment as growth in Cloud and Colo spending failed to offset decreases in Incumbent capex. Overall, NA spending stalled in the face of the beginning of the transition from long haul to metro WDM capex.
  • Huawei drove EMEA’s modest annual spending growth in 2016, as its strong performance in this region masked the decline in revenue experienced by other equipment vendors.
  • Optical equipment spending in China – led by Huawei – increased dramatically. Deployment of coherent 100G ports doubled from that of the previous year. 2017 heralds even more rapid change, as Huawei and ZTE use new component technologies and the deployment of 100G moves to the regional level.
  • Outside of China, Ciena and Nokia outperformed their peers by leveraging leading edge 200G technology and tightly integrated supply chains. ADVA benefited from a wave of Cloud and Colo spending but now must face the uncertain revenue cycles that are characteristic of these customers. Infinera is scrambling to complete a critical product cycle while Fujitsu and Coriant navigate product and market transitions.
  • Subscribers to the Optical Hardware report can download an excel file with actual results through 4Q16. This Excel file contains only historical data, and it is an interim release. A subsequent file with updated forecasts and additional analysis will be available March 3, 2017.
Report Details Excel

Detailed analysis of the market and its participants during 4Q16 and the 2016 calendar year follows.
Requires Optical Hardware subscription.

3Q16 Optical Hardware Results

Cignal AI has released its comprehensive 3rd quarter 2016 (3Q16) optical equipment market share analysis, which provides a summary of revenue results for the quarter.

Summary

The global spending on optical network equipment increased dramatically in 3Q16, with all global regions showing increased spending year over year (vs 3Q15).

  • In North America, Ciena, Nokia, ADVA and Coriant all recorded positive year over year (YoY) results with Cloud and Colo customers driving large revenue gains. Overall, the NA region grew more modestly YoY than some of the other regions.  Cable MSO’s spending declined, and large gains from the above vendors offset revenue declines at both Fujitsu and Infinera.
  • Huawei was the driver of  YoY growth for EMEA yet again, as the company’s strong performance continued to mask declines in revenue for other equipment vendors in the region. Excluding Huawei, there was a sharp decline in spending, and Infinera was the only other vendor with substantial YoY gains.
  • Chinese optical equipment spending continued to surge, 20+% YoY, as coherent 100G deployment marched forward. Chinese equipment companies anticipate further growth through 2017, with an acceleration in metro WDM deployment next year.
  • Outside of the secular boom benefiting Chinese suppliers,  Ciena and Nokia performed well YoY and ADVA preserved large gains it made in 2Q16. A common denominator of growth was exposure to the Cloud and Colo sector.
  • Japanese equipment suppliers enjoyed a second quarter of YoY revenue increases as 100G deployment is ramping up in the region. At the same time, a market share shift from NEC to Fujitsu appears to be taking place.

Subscribers to the Optical Hardware report can download an excel file with actual results through 3Q16. This Excel file contains only historical data, and it is an interim release. A subsequent file with updated forecasts and additional analysis will be available November 28th.

Excel

Detailed analysis of the 3Q16 market and its participants follows.
Requires Optical Hardware subscription.

Investor Call – China 2017, CFP2-ACO, Coherent DSPs

Andrew Schmitt gave an update on the optical equipment and component market during an investor call hosted by Troy Jensen of Piper Jaffray on Tuesday, October 4. Sixty-eight investors participated. An extended Q&A session followed Andrew’s presentation, and topics of interest included:

  • China 100G port volume trends for 2H16 and 2017
  • Huawei’s upcoming 100G technology decisions and supplier purchasing shifts
  • CFP2-ACO shipments and the component & equipment supply chain for this product
  • Coherent DSP R&D developments and supplier updates
  • Updates on direct-detect 100G and PAM-4 development
  • Observations on Infinera, Ciena, Acacia, Inphi, and Clariphy and discussion of potential M&A activity

Following is a summary of the key takeaways, as well as a full transcript of the discussion. Cignal AI clients can also listen to an audio replay.

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ECOC 2016 Notes and Observations

Andrew Schmitt presented at the ECOC (European Conference for Optical Communications) in Dusseldorf, Germany during the week of Sept. 19. No time was wasted during the trip as Andrew fit in well over 30 scheduled meetings with component and equipment suppliers and end users of optical hardware.

The meetings were very productive and we gained new insight in several areas:

  • Huawei’s plans to transition to 100G CFP-DCO technology and what will follow
  • Updates on vendor selection and R&D in coherent DSPs
  • Details on the ongoing ramp in CFP2-ACO and the development of this new market
  • Overview of 400G market development
  • More insight into Nokia’s China Mobile optical design win

Requires Optical Active Insight subscription.

1H16 Optical Hardware Applications

Our 1H16 edition of the Optical Hardware Applications report has been published.

The Excel file contains:

  • Datacenter Interconnect Hardware market share and forecasts
  • Advanced Switching Hardware market share and forecasts
  • 100G+ Coherent port shipments and market share
  • 100G+ Metro and edge port shipments and forecast
  • 100G+ Port shipments and forecast by speed & technology

Subscribers can download the full excel file, registered users can view updated report information. Analysis is under way – we wanted to share market data with you as it became available.

Report Details Excel

2Q16 Optical Hardware Results

Cignal AI has released full optical equipment market share analysis from 2nd quarter 2016 (2Q16). This report summarizes optical equipment revenue results for the quarter.

Subscribers to the Optical Hardware report can download an excel file with actual results through 2Q16. This Excel file contains only historical data and is an interim release. An excel file with updated forecasts and additional analysis will be available August 29th.

Excel

Summary

Global spending on optical network equipment grew 15% from the previous quarter. However, this growth was largely driven by Huawei’s strong results in China and its export markets. Without Huawei’s results, the market was essentially flat YoY.

  • In North America, Ciena, Coriant, and Fujitsu recorded a weaker quarter than the previous as the robust spending from Cloud and Colo operators and from Cable MSO’s was not enough to offset declines in spending by the tier-1 operators such as AT&T and Verizon.
  • Huawei carried EMEA to year over year (YoY) growth; however, it masked a steep decline in revenue for other equipment vendors in the region.
  • In China, optical equipment spending was up dramatically–25% YoY– as the widespread deployment of coherent 100G continued to unfurl.
  • Second to Huawei, ADVA posted the strongest quarterly results with a large increase in coherent 100G shipments to North American Cloud and Colo customers. Also, Nokia secured a major win with China Mobile.

Detailed analysis of the market and it’s participants for 2Q16 follows.
Requires Optical Hardware subscription.

Acacia 2Q16 Preview

Acacia is scheduled to report earnings on August 11th, and this will be the company’s first quarterly report since completing its recent IPO. In April 2016, Cignal AI examined Acacia’s business and S-1 filing in detail and provided our analysis on the company (see Acacia Communications – IPO Analysis).

ADVA’s recent quarterly results hint at what to expect from Acacia’s 2Q16 results announcement. In the following, we provide relevant excerpts on Acacia from our just-posted ADVA 2Q16 notes so that we may share this Active Insight with our wider client and end-user audience, who may not necessarily be subscribers to our Optical Hardware reporting.

Some followers of the market are anticipating flat revenue results from Acacia in Q2.  Based on our analysis, we think this expectation is too conservative.
Requires Optical Active Insight subscription.

2H15 Optical Hardware Applications

Our initial set of optical equipment results and forecasts for Datacenter Interconnect, Advanced Optical Switching, as well as detailed 100G+ Coherent and non-coherent port shipments have been published in Excel format.

Report information, tracked vendors, and details on categories have also been updated. Subscribers can download the full excel file, registered users can view updated report information.

Report Details Excel