Optical communication component makers expect strong demand from 5G sector in 2020

Most Taiwan-based makers for optical communication components believe that their shipments of 5G devices will grow steadily starting the third quarter of 2019 before booming in the first half of 2020, despite mixed results for individual companies seen in August.

Active deployments of 5G networks in China and Korea, particularly in the former, will drive the anticipated shipment growth, according to industry sources.

Despite the ongoing US-China trade war, Chinese telecom operators have accelerated deployments for 5G networks after the government released 5G licenses in June, said the sources.

China Mobile Fujian (Fujian Mobile) released its first wave of bidding projects for 5G base stations at the end of August – projects which may need to purchase up to 30,000 sets of equipment consisting of optical communication components and switches, indicated the sources.

In addition to its existing portfolios of short-wavelength VCSEL components, TrueLight said that it has begun shipping long-wavelength 25G components at a rate of 5,000-10,000 units a month since July.

With their ASPs ranging from US$30-40 per unit, TrueLight estimates that shipments of long-wavelength 25G products to account for 5% of its revenues by year-end 2019.

TrueLight posted revenues of NT$146 million (US$4.68 million) for August, up 19.24% on month but down 13.85% on year. Year-to-date revenues totaled NT$961 million, down 30.1% on year.

LandMark Optoelectronics, a maker of GaAs- and InP-based epitaxial wafers, revealed that it will begin volume production of 25G single-line chips and VCSEL products for 5G applications in September-October.

Its second plant is also slated for commercial runs by the end of 2019, said the company, adding that the new plant has a production capacity two times of its existing plant.

LandMark’s revenues decreased 1.94% on month but increased 3.11% on year to NT$206 million in August. For the first eight months of 2019, revenues reached NT$1.432 billion, down 2.93% on year.

Optical transceiver module maker PCL Technologies posted revenues of NT$185 million for August, down 6.49% on month due to decreased shipments of 32G transceiver modules. The August revenues were up 7.48% from a year earlier.

The company expects demand for its 32G products from the cloud data center segment to rebound in the fourth quarter.