Slow OFC reveals changing industry

May 1, 2003
The cavernous halls of the Georgia World Congress Center made the turnout at Optical Fiber Communications 2003 (OFC; Atlanta, GA; March 23–28) seem even lighter than reality.

The cavernous halls of the Georgia World Congress Center made the turnout at Optical Fiber Communications 2003 (OFC; Atlanta, GA; March 23–28) seem even lighter than reality. The uncertain state of the industry was captured in the annual OFC briefing given by Corning (Corning, NY), when Robert Brown, vice president of the company's optical fiber division, said that the global market for fiber dropped 50% in 2002 to 55 million km. And there is still twice as much fiber-manufacturing capacity available as current demand. The good news was that Asia, especially Japan and China, show relative strength and that the total of 600 million km of fiber now deployed worldwide represents just 20% of the potential market. However, he predicted a 10% decline in global capital expenditures by carriers in 2003, as they struggle to correct their balance sheets.

Neither Brown nor Gerald Fine, senior vice president of Corning Photonic Technologies, would comment on 2004 or beyond, but Fine saw signs of stabilization in optical-component pricing. He said the 2003 component market should remain stable relative to the second half of 2002, although down 15% to 25% year on year. He also reiterated investor guidance regarding Photonic Technologies, stating that Corning will find a partner, go it alone with a limited product line, or sell. A decision will be made by midyear.

The consensus of most speakers at OFC was that carriers face a broken business model in which bandwidth demand continues to grow at 50% to 100% per year, far surpassing voice, but revenues remain flat and even in decline. In addition, opportunity clearly has shifted from long-haul to metro, access, and enterprise networks. Consequently, the focus of new products on the show floor was to provide more value at lower cost. Innovative components and subsystems came from companies such as Xponent (Monrovia, CA), which offered new surface-mounting technology; GalayOr (Lod, Israel), which offered silicon-on-chip integration; Zia Laser (Albuquerque, NM), with its indium arsenide quantum-dot distributed-feedback lasers; and Lightbit (Mountain View, CA), which demonstrated its all-optical 2R regenerator based on optical phase conjugation (see figure).

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New tunable technologies were much in evidence, as exemplified by a widely tunable filter from Iolon (San Jose, CA) and a tunable transponder from Agility Communications (Santa Barbara, CA). NeoPhotonics emerged from its acquisition of Lightwave Microsystems with what it said was a line of waveguide-based components and subsystems that is already challenging more-established players.

To meet the need for improved manufacturing efficiencies, newcomer LxSix (St. Laurent, Quebec), launched its automated laser-processing technology for writing gratings on multiple media; Newport (Irvine, CA) showed its optical processor based on digital light-processing technology from Texas Instruments (Dallas TX); and Melles Griot (Irvine, CA) announced a new six-axis nanopositioning stage.

Outsourcing, especially to China, was a major topic of discussion, with Wavesplitter (Fremont, CA) moving all it manufacturing to Taiwan, and Oplink Communications (San Jose, CA) repositioning itself as an optical-manufacturing services company with sophisticated capabilities in China. The China Forum, co-sponsored by PennWell and the Optical Society of America, set the stage for much of the discussion surrounding the emergence of China as a major factor in telecommunications, both as consumer of services and global manufacturing resource.

The show drew just over 15,000 attendees: 4358 technical, 5397 exhibit, and 5268 walk-in.

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