In 2020, the development momentum of optical communication industry is very strong. At the end of 2019, the demand for DWDM, Ethernet and wireless forward connections surged, leading to a shortage of supply chain. In the first quarter of 2020, the covid-19 pandemic forced factories around the world to close, and supply chain pressure rose to a new level. Most device manufacturers said that sales revenue in the first quarter of 2020 was lower than expected, and the performance expectation for the second quarter was full of uncertainty. In early April, factories in China reopened. But today, most businesses in Malaysia and the Philippines are still closed, and businesses in Europe and North America have just reopened.
At this stage, the demand for optical connectivity in telecommunication networks and data centers is even stronger than at the end of 2019. However, due to the popularity, some network and data center construction projects have been delayed. Transceiver suppliers will not be able to meet their original production plans for this year, but the sharp drop in product prices is likely to slow down in 2020.
Driven by the deployment of Chinese market, FTTx and AOC will also achieve double-digit growth this year. Ethernet and DWDM markets will resume double-digit growth in 2021 to catch up with this year's delays.
On the whole, both optical device manufacturers and chip manufacturers are affected by covid-19, but the optical device manufacturers with large market revenue share have better performance. Driven by the early recovery from the epidemic in the Chinese market and the planned deployment of 5g by the three major operators, these industry chain manufacturers are expected to continue to benefit from the growth of market demand in China.
