30
2018
-
11
The "prospects" and "financial outlook" of 5G optical modules.
Summary:
The Ministry of Industry and Information Technology has issued 5G commercial licenses to China Telecom, China Mobile, China Unicom, and China Broadcasting Network, officially announcing the arrival of the 5G era.
The Ministry of Industry and Information Technology has issued 5G commercial licenses to China Telecom, China Mobile, China Unicom, and China Broadcasting Network, officially announcing the arrival of the 5G era.
As the basic building block of the physical layer of 5G networks and the core component in base stations and transmission equipment, the optical module industry is also ushering in a new round of development opportunities. According to China Merchants Securities, the commercial use of 5G will significantly drive the growth of optical module demand, with nearly ten million base stations needed for nationwide 5G coverage in the future, leading to a potential demand for over one hundred million high-speed optical modules, with initial market demand exceeding 30 billion yuan, and the total market space accumulating to over 10 billion US dollars.
With a new demand of millions, and a wide range of application scenarios in transmission/access/data communication, the market seems to be thriving; however, the apparent prosperity cannot hide the difficulties behind it. The continuous decline in optical module prices, excessive competition in the industry, slow progress in the localization of high-end products, reliance on foreign core chips, and uneven development of the industrial chain have all become challenges troubling the domestic industry chain.
The enticing "prospects"
According to the latest optical communication market forecast report released by LightCounting, the timely deployment of 5G may become one of the three major events that could drive the global optical transceiver market to achieve a compound annual growth rate (CAGR) of 14% between 2003 and 2024. Now that 5G licenses have been issued, the first step in the market forecast has been taken.
Global optical transceiver sales growth from 2003 to 2024
Wei Le Ping, Executive Deputy Director of the Communication Technology Committee of the Ministry of Industry and Information Technology, believes that the 5G era will bring huge opportunities for optical modules. According to the uplink edge rate of 3 Mbps and different networking methods, the number of required outdoor macro stations for 5G is at least 1.2 to 2 times that of 4G; if indoor coverage mainly relies on tens of millions of small base stations, it is expected that 5G will bring a demand for tens of millions of 25/50/100 Gbps optical modules. China Merchants Securities predicts that the scale of macro base stations in the 5G era will reach 5 million, with nearly 10 million small base stations, and the total investment of the three major domestic operators will approach 165 billion US dollars, compared to 110 billion US dollars during the 4G period, an increase of nearly 50%.
Guolian Securities' forecast is also optimistic, believing that the domestic market for 5G optical modules will be nearly 70 billion. For 5G transmission, new high-speed optical modules of 25/50/100 Gb/s are gradually being introduced in the front transmission, middle transmission, and backhaul access layers, while N×100/200/400 Gb/s high-speed optical modules are widely introduced in the backhaul aggregation and core layers.
In addition, the transition of data centers to a two-tier architecture will also increase the demand for optical modules. According to statistics and forecasts from Ovum, the sales of 100 Gb/s optical modules began to grow rapidly in 2017, and it is expected that by 2022, the sales revenue of 100 Gb/s optical modules will exceed 7 billion US dollars.
The bitter "money scene"
Various factors have stimulated the increase in optical module demand, and on the surface, the prospects seem bright; however, the current situation in the optical communication market is that module prices are falling, and manufacturers are caught in a dilemma, struggling to survive.
The explosive growth in demand leads to fierce market competition, which in turn causes prices to decline, a pattern that is no exception in the optical communication industry. For example, in the case of PON optical modules, prices are also decreasing. Dai Qiwei, product line manager for global PON series products at Guangxun, stated that based on the investment trend in global PON series products, 10G PON OLT/ONU may welcome a rapid explosion time window, with a compound annual growth rate expected to exceed 50%, which will lead to increasingly fierce market competition and a snowballing decline in PON optical module product prices.
On one hand, the price of optical modules is declining year by year, and this decline will accelerate in the 5G era; on the other hand, the drawbacks of excessive competition in the market are gradually becoming apparent, disrupting ecological health. As one of the top three optical module manufacturers in China, Li Dawei, CTO of Hisense Broadband, pointed out that the phenomenon of "not participating in competition means complete exit, while participating in competition is equivalent to chronic suicide" has become a key issue in the industry.
The uneven development of the industrial chain is also a pain point in the industry. From a revenue perspective, in the optical communication industry, equipment manufacturers and chip manufacturers have relatively high gross profit margins, while foundries and component packaging have gross profit margins of less than 10%. High investment and high returns help enterprises' metabolism, while low gross profit margins make it difficult to achieve sustained innovation, which poses a challenge for related enterprises.
In addition, the slow progress of high-end chip localization has become a hard injury in the development of the domestic optical communication industry. In the past decade, except for core optoelectronic chips, although domestic companies have advantages in chip packaging and module production capacity, they still rely heavily on foreign suppliers for high-end optical chips and electronic chips, making localization urgent.
It is undeniable that from the perspective of the entire 5G optical module market, operators and major equipment manufacturers are actively investing, and the cake is indeed large; however, entering the competition for this cake is somewhat bitter.
Latest Blog
2024-12-10
Shenzhen No. 33 High School Wireless Coverage Project
800 degrees! Shenzhen Third Thirty-Third High School has arrived, and the company is applying the wireless AP project.
2023-10-05
Nantian Weishi released a wireless high-density access point.
Nantian Weishi released a wireless high-density access point.
2024-11-28
The 15th Expansion Activity of Nanjing Tianwei Vision's Government and Enterprise Division
The 15th expansion event of Nanjing Tianwei Vision's government and enterprise division, happy work, grateful to have everyone.
Copyright © 2025 Shenzhen Nantian Weishi Technology Co., Ltd. All Rights Reserved SEO Business License Powered by：CEglobal
SAF Coolest v1.3.1.2 设置面板 GAGSE-ZGYF-JAAEE-ZWE
https://dc.thefastmake.com/index.html?configure=--enable-dom-interceptor