MUX-DEMUX components market to decline 22%

June 28, 2001
The worldwide market for DWDM mux-demux components in telecom applications is forecast to decline 22% this year, according to a new report from Strategies Unlimited.

The worldwide market for DWDM mux-demux components in telecom applications is forecast to decline 22% in 2001, compared to 2000, according to a new report by market research firm Strategies Unlimited. The decline is attributable to several factors, including a decline in new orders for DWDM equipment, excess component inventory, and falling prices. The market for 2000 was estimated at over $960 million worldwide. The report, called DWDM Mux-Demux Components and Modules: AWG, Thin-Film, FBG, and Diffraction Gratings�2001-2005, analyzes the market for narrowband mux-demux devices for different applications, device types, and wavelength bands and spacings.

Mux-demux devices enable DWDM systems by combining (mux�or multiplexing) and separating (demux�or demultiplexing) the different wavelength channels at the terminals. The components require extremely high-precision manufacturing techniques to route the channels with a minimum of loss and interference with other signals. There are three types of mux-demux products in the market today: those manufactured with a fiber platform (fiber Bragg gratings), those with a micro-optic assembly (thin-film filters and diffration gratings), and those with a planar platform similar to semiconductor fabrication (arrayed waveguide gratings and echelle gratings). The vendors of DWDM transmission equipment divide among these three manufacturing platforms, with loyal customers for each approach.

According to Strategies Unlimited analysts, the market for arrayed waveguide gratings, or AWGs, was particularly hard hit in 2001. Not only have the AWG customers seen a decline in new equipment sales, but AWGs are sold as high-channel-count modules. Because of this, end users have less need to add new AWG modules to old systems, since these systems have many extra channels remaining, at least for now. AWG suppliers include Bookham Technology, Hitachi Cable, JDS Uniphase, Kymata, Lightwave Microsystems, and NEL.

In contrast, thin-film filters and fiber Bragg gratings are sold in smaller-channel-count modules, and have been able to continue to sell modules into existing systems as the end users upgrade their capacity. Suppliers include Alcatel Optronics, Avanex, Corning, DiCon Fiberoptics, JDS Uniphase, and Oplink Communications.

The analysts report that the rapid expansion of mux-demux sales in 2000 led to a flood of new suppliers in 2001. There are now over 70 suppliers offering products into this part of the telecom components market. Most are not shipping products, and few are likely to survive through next year. Of all the companies in the market, JDS Uniphase stands out as the overall leader, with 66% market share overall, as well as a strong position in every product category.

Besides intense competition among suppliers, the future of some product types remains unclear. The thin-film platform is not giving up its place as the leading mux-demux technology, compared to fiber and AWG approaches. AWGs suffer from a paradox: their cost-effectiveness is greater for higher-channel-count devices, but suppliers need to sell less-integrated devices to increase the unit sales, and therefore improve their competitiveness against higher-volume products. With the decline in the pure mux-demux market in 2001, however, suppliers of AWGs are also looking toward related integrated products, such as dynamic filters and switches, for new opportunities. Meanwhile, key vendors now view some thin-film products as approaching commodity status and are looking to 50 and 100GHz products, and interleavers, as more rewarding opportunities in that segment.

A number of companies are offering coarse WDM�or CWDM�products that aim at using lower cost components to increase the penetration of WDM closer to the access portion of telecom networks. Devices based on thin-film and diffraction gratings will be preferred for this application.

The report categorizes all of the mux-demux approaches and suppliers, including diffraction and echelle gratings and interleavers, and market share estimates for major products. North America currently leads the world in both supply and consumption of mux-demux products for telecommunications applications, with over 84% of the revenues going to North American manufacturers.

The report also reviews the demand for key constituent materials that go into fiber gratings, thin-film filters, and AWGs for mux-demux products. The expansion of the market in 2000 led to large growth in this supply market, and for the processing equipment used to manufacture the mux-demux devices. For more details, contact Strategies Unlimited on +1 650 941-3438 (voice) or +1 650 941-5120 (fax), e-mail at [email protected], or check the company's web site at http://www.strategies-u.com.

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