The market for Ethernet optical transceivers is expected to decline by 18% in 2019, which will be the steepest decline in the recorded history of this market, according to a new report from LightCounting.
Global sales of Ethernet optical transceivers increased by 16% CAGR in the period from 2004 to 2018, including a 5-year streak of 27% CAGR in 2012-2017. This accelerated growth was driven by deployments of optics in mega datacenters. The growth streak was started by Google deploying 10GbE transceivers in 2007-2008 and gained scale in 2012-2017 with the adoption of 40GbE and 100GbE transceivers.
LightCounting suggests that this market segment will post a 22% CAGR in 2019-2024, after a reset in 2019, driven by sales of next-generation products and continuing demand for 100GbE optics.
Several factors contributed to a slowdown in the market growth last year and a decline in 2019:
- Transition to next-generation products takes longer than expected,
- 100GbE prices reached new lows in Q1 2019 and reset expectations for the pricing of the next-generation products,
- The slowdown in Cloud spending on optics deployed inside mega datacenters.
- There is a lot of economic uncertainty related to escalating trade war between China and the US. The trade war has already impacted the economy in China and Chinese Cloud companies have lowered spending on high-speed optics as a result. More conservative infrastructure spending of US-based vendors aligns to the uncertain macro-economic situation.
