Global and China Optical Component & Subsystem Industry Report, 2009

Optical components include two categories -- subsystem and passive component. Subsystem consists of optical fiber amplifier, optical transceiver, optical transponder and optical line protection subsystem; and passive component is primarily composed of wavelength division multiplexer, optical connector and optical integrated device.

In optical component industry, there are a variety of products, which can be divided into dozens of types. They differ in performance, application and special requirement, so each type has hundreds of models. As a result, the production of optical components is commonly determined by orders; therefore, the flexibility of the production lines is highly required in a relative way. Production lines involve basic part production and processing, chip fabrication, coupled device packaging, module & subsystem design and production as well as many other basic segments, so that the internal industrial chain including sub-components, components, modules and subsystems is formed. In addition, there is an increasingly evident tendency for the division of labor based on specialization in every chain segment. In optical component industry, products are still handmade and machined, and a large number of skilled workers are needed, so China is the largest optical component production base in the world.

After technology stock bubble collapsed in 2001, optical component industry plummeted. But, it regained from 2004. The gross profit margin increased year by year, even peaked in 2007 and 2008. In 2009, the influence of the global economic crisis on optical component industry was not as serious as that in 2001; most companies only suffered a little decline. Optical component industry has been used to the economic crisis, and it has very strong cost control power.

New technologies develop rapidly in optical component industry. Every company spends heavily in research and development of new technologies. Mergers and acquisitions frequently occur in this industry. For large enterprises, there are 4 to 5 M&A cases each year; while, for small enterprises, 1 or 2 M&A cases each year.

Currently, the world’s top 10 optical component manufacturers are independent of communications system equipment manufacturers who have separated or sold their optoelectronic sectors. Cases in this regard include: Lucent Technologies made Agere Systems be listed on New York Stock Exchange independently in 2001; Marconi and Nortel Networks sold their optical component business to Bookham respectively in 2002; Corning and Alcatel sold their optical component business to Avanex respectively in 2003; Ericsson announced it would sell its optical component business to OrthLight in 2003.