Industry News
Optical Transmission Market Outlook in 2023
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Author : JIUZHOU
Update time : 2023-01-19 09:26:00
In 2023, even with worsening global macroeconomic conditions, the view remains optimistic that optical revenues will increase. Specifically, analysts expect component supply tightness to ease and suppliers to be able to meet orders customers have placed into their ballooning backlogs.
A few days ago, an analyst responsible for the market research project of optical transmission and microwave transmission and mobile backhaul transmission shared his outlook for the optical transmission market in 2023. Here's what it looks like:
God bless you (if you're superstitious), but as we head into 2023, it looks like the worst is over for the optical transport market. To recap: 2022, China's city-level lockdown due to COVID-19, economic sanctions on Russia due to Ukraine war, rampant inflation, skyrocketing fuel prices, slowing global economy, and parts shortages...in a nutshell , it was a turbulent year.
In most years, it only takes one or two such incidents to cause a sharp decline in the optics market, but not this time. Through it all, the global optical transport market remains strong and we forecast it will decline by up to 1% in 2022. Of course, things will be different at the regional level, given the wars in Europe and the COVID-19 lockdown in China. Based on the results for the first nine months of 2022, we see a decline of about 15% in Europe and about 3% in China. Notably, much of the decline in Europe was due to lower exchange rates against the U.S. dollar. So, on a constant exchange rate basis, the contraction in the European market is actually very small. Most of the decline in these two regions was offset by growth in North American revenue, which we expect to grow at a double-digit rate.
For 2023, we remain optimistic that optics revenue will increase even as global macroeconomic conditions deteriorate. Specifically, we expect component supply constraints to ease and suppliers to be able to meet orders that customers have placed into their ballooning backlogs. Even in Western Europe, beleaguered by war and high oil prices, there does not appear to be a significant slowdown in 2023. In fact, many optical equipment suppliers say they are not currently seeing the impact of deteriorating macroeconomic conditions in Western Europe. Also recently, inflation is falling, and China has moved away from dynamic zeroing, ending city-wide lockdowns. The lockdown has slowed the country's economic growth and amplified some supply problems.
Our biggest concern for 2023 is the uncertainty of supplier backlogs. While the backlog has increased over the past few quarters with orders exceeding revenue, it is unclear to what extent the duration of the backlog will be extended. That is, will customers start delaying system deliveries when supply concerns abate later in the year?
Worst-case scenarios aside, we're also excited about the arrival of a new high-speed coherent DSP.
While I'm not superstitious, I'm praying that the worst is over.
A few days ago, an analyst responsible for the market research project of optical transmission and microwave transmission and mobile backhaul transmission shared his outlook for the optical transmission market in 2023. Here's what it looks like:
God bless you (if you're superstitious), but as we head into 2023, it looks like the worst is over for the optical transport market. To recap: 2022, China's city-level lockdown due to COVID-19, economic sanctions on Russia due to Ukraine war, rampant inflation, skyrocketing fuel prices, slowing global economy, and parts shortages...in a nutshell , it was a turbulent year.
In most years, it only takes one or two such incidents to cause a sharp decline in the optics market, but not this time. Through it all, the global optical transport market remains strong and we forecast it will decline by up to 1% in 2022. Of course, things will be different at the regional level, given the wars in Europe and the COVID-19 lockdown in China. Based on the results for the first nine months of 2022, we see a decline of about 15% in Europe and about 3% in China. Notably, much of the decline in Europe was due to lower exchange rates against the U.S. dollar. So, on a constant exchange rate basis, the contraction in the European market is actually very small. Most of the decline in these two regions was offset by growth in North American revenue, which we expect to grow at a double-digit rate.
For 2023, we remain optimistic that optics revenue will increase even as global macroeconomic conditions deteriorate. Specifically, we expect component supply constraints to ease and suppliers to be able to meet orders that customers have placed into their ballooning backlogs. Even in Western Europe, beleaguered by war and high oil prices, there does not appear to be a significant slowdown in 2023. In fact, many optical equipment suppliers say they are not currently seeing the impact of deteriorating macroeconomic conditions in Western Europe. Also recently, inflation is falling, and China has moved away from dynamic zeroing, ending city-wide lockdowns. The lockdown has slowed the country's economic growth and amplified some supply problems.
Our biggest concern for 2023 is the uncertainty of supplier backlogs. While the backlog has increased over the past few quarters with orders exceeding revenue, it is unclear to what extent the duration of the backlog will be extended. That is, will customers start delaying system deliveries when supply concerns abate later in the year?
Worst-case scenarios aside, we're also excited about the arrival of a new high-speed coherent DSP.
While I'm not superstitious, I'm praying that the worst is over.
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