Market softness dictates global optical components market in Q3 2011

MELBOURNE, AUSTRALIA: The global optical components (OC) market contracted 0.2 per cent sequentially in the third quarter of 2011, due to market softness owing mainly to macroeconomic uncertainty, according to Ovum.

In a new market share alert, the independent telecoms analyst firm finds a drop in revenues to $1.57 billion, marking contraction for the second sequential quarter. The outlook is for a double-digit revenue decline in the fourth quarter due to the production shutdown from flooding in Thailand and continued market-wide softness.

Daryl Inniss, Ovum analyst and author of the market alert, said the contraction had been caused by the uncertain macroeconomy he commented: “Although there has been a slight decline in the sector, market leader Finisar grew by three per cent sequentially but lost market share on a rolling 4Q basis.”

Inniss expects a weak first half of 2012 as the impact of floods and macroeconomic uncertainty persists and strong price pressures result in steep 2012 price declines.

He commented: “We are hearing about strong price pressures in the current negotiations among the key players, and this will take effect in 2012. Most of the negotiations are at the lower end of the traditional price decline scale. This aggressive pricing is a signature of the competitive environment, exasperated by supply constraints due to the Thai floods. These lower prices will affect both revenues and the bottom line."

Meanwhile, according to the report findings, among the top 10 OC suppliers, Fujitsu Optical Components posted the strongest quarter with growth of 28 per cent sequentially and a gain of 50 per cent versus the same quarter last year. Oclaro meanwhile posted the weakest performance, with revenues six per cent less than in the previous quarter.

Inniss added: “All is not lost though; we believe there will be strong growth between the second and third quarter of 2012. The pent-up demand will drive the market to a strong second half of 2012, even as macroeconomic uncertainty persists.”