Industry News

Cloud company optics spending nearly pandemic proof: LightCounting

Spending on optics – such as Ethernet optical transceivers, DWDM optics, active optical cables (AOCs) and embedded optical modules (EOMs) – such “cloud” companies as Amazon and Google appears to be weathering the COVID-19 storm so far this year, according to LightCounting. Despite some hiccoughs, sales of optics to such companies remains set to reverse last year’s downturn, the market research firm says in its new 2020 Mega Datacenter Optics Report.

Cloud companies had been ravenous for optical communications technology as they build new data centers or expanded existing ones, LightCounting notes. Segment spending increased by more than 50% in 2016 and more than 70% in 2017, the market research firm states. However, momentum slowed in the latter half of 2018; combined with sharp deceases in the selling price of 100 Gigabit Ethernet (GbE) optical modules, revenue shrinkage continued in 2019, leading to an overall year-on-year decline of 13% (see graph above).

The onset of the COVID-19 pandemic hasn’t helped matters this year. LightCounting notes that some data center deployments have been delayed and Facebook has postponed planned deployments of 200GbE until 2021. However, Amazon and Google appear to be going full steam ahead on 400GbE deployments, while Chinese cloud companies are on pace to set a 100GbE spending record now that the country appears to have put the pandemic behind them.