Horizontal and vertical expansion of optical module prosperity

The three driving forces of demand in the data communication market are: (1) the explosion of data traffic; (2) Upgrade the network architecture of the data center; (3) Global destocking is nearing its end. In recent years, the continuous surge in global information traffic demand has promoted the rapid development of the ultra large data center market, and the demand for optical modules is directly proportional to IDC and data traffic. Therefore, while the demand for the number of optical modules has increased, it has also prompted the iterative updating of optical modules. Global cloud computing vendors are launching a demand conversion from 100G to 400G optical modules.

Vertical traffic will gradually replace horizontal traffic: the mainstream two-layer ridge topology configuration in vertical traffic scenarios is flatter and more intelligent, which not only increases the demand for optical module transmission speed but also stimulates demand. It is predicted that the 400G optical module product will soon enter the stage of large-scale application.

After the trade friction between China and the United States, global ICP giants have slowed down capital expenditures and destocked optical modules. The turning point of the industry has emerged in Q3 2019, global destocking is nearing its end, and capital expenditure has bottomed out and rebounded.