Compact modular grows faster than overall optical market in 3Q20 – report

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Global compact modular revenue grew 24% in the third quarter of 2020 (3Q20) over the prior year, versus just 7% growth for the total optical market, according to the latest Transport Applications Report from market research firm Cignal AI. Cignal AI defines “compact modular” as small form factor optical hardware that is designed for use in open and disaggregated networks.

“Compact modular is gaining popularity with a wider set of network applications and operators due to the continued adoption of disaggregation outside cloud and colocation,” said Scott Wilkinson, lead analyst at Cignal AI. “The market saw extraordinary growth in Asia Pacific over the last two quarters, with sales in the region now approaching those of EMEA.”

Meanwhile, the 400ZR market is getting underway, with several hundred modules shipped for testing and evaluation in 3Q20. “The demand pipeline for 400ZR remains strong and operators are pleased with the prototypes under evaluation,” said Andrew Schmitt, directing analyst at Cignal AI. “Acacia had a huge quarter thanks to a large buildout at Amazon AWS.”

The report says that although Ciena reported a flat quarter overall for optical sales, its compact modular sales were up 18% year over year, and the company maintained its market leadership by a wide margin. It also found that compact modular sales in APAC grew by more than 75% in the quarter; Huawei (mostly in China), Fujitsu (in Japan) and Nokia all more than doubled their sales in the region. Year-over-year sales of packet-OTN equipment grew only in APAC this quarter, and sales in North America declined by more than 25%. In addition, it forecast that overall compact modular sales growth will decelerate to low single digits in 4Q20 as capex budgets evaporate, especially in North America, pluggable coherent optics are projected to account for 40% of the high-performance optical market by 2024 and shipments of fixed 400 Gbps+ coherent ports jumped 65% sequentially, to over 35,000 ports in the quarter.

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