Optical device manufacturers benefit from data center, infrastructure spec upgrades

Taiwan’s optical communications equipment suppliers including EZconn and Browave are poised to gain new growth momentum in the second half of the year due to the increasing penetration of higher specification solutions into optical communications infrastructure projects and data centers in the US and Europe. according to industry sources.

Optical network construction in the US and Europe is accelerating with handsome government grants as the pandemic weakens further, with 10G GPON (gigabit-capable passive optical network) and EPON (Ethernet PON) there increasingly integrated for optical communications applications, the sources said. .

With stable order visibility for 2022, EZconn said its orders from Europe, especially for fiber-to-the-home solutions, could keep its production lines busy until the fourth quarter of the year.

Shipments of optical devices for data center applications in the first half of 2022, primarily to customers in the US, are already on par with annual deliveries for the segment in 2021, the company announced, adding that it plans to open a new production line. set up in Taiwan to serve better customers.

EZconn said global inflationary pressures are driving up materials costs and supply chain adjustments are impacting component inventory management, manufacturing efficiency and delivery times. But the company stressed that it will still manage to achieve a slight increase in sales in 2022 and maintain gross margins at 25% by improving its shipping portfolio.

The company also noted that the sales ratio for optical communications products will rise to 65-70% from 60% by the end of the year, and that the ratio for another major product line, RF connectors, will gradually decline.

Another dedicated vendor, Browave pointed out that its revenue growth momentum in 2022 will primarily come from three key applications: 400G/800G fiber harnesses for data centers, branch and wavelength division multiplexing (WDM) solutions for next-generation PON, and WDM products for the next. generation of cable TVs (CAT).

The company said it has sent fiber optic harnesses for 2x400G transceivers to customers for validation, with volume production set to begin in the second half of 2022. The fiber harness for 1x800G transceivers is expected to start generating revenue in 2023.

Driven by strong demand for optical devices for broadband connectivity infrastructure and data center applications, Browave’s revenues grew 48.9% year-over-year to NT$1.36 billion (US$45.82 million) in January-May 2022.

The company indicated that its production capacity for 32G transceiver modules is expected to be fully utilized until the end of the year, further driving sales growth in the second half of the year.

Already validated by major US data center operators, the 400G transceiver modules could enter volume production in the second half of the year to meet the replacement wave for 400G switches paired with corresponding transceiver modules by 2023, the company said.

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