Suppliers of 100G optical components for telecom applications first reported a sharp increase in demand in Q4 2015 and set new sales records for these products in Q1 2016. Data on shipments of 100G DWDM ports by Huawei, shown in the figure below, illustrates the increased demand.
Huawei shipped more 100G DWDM ports than five of its competitors combined in Q1 2016. Three of these five competitors also reported increased shipments of 100G optics with the remaining two posting seasonal declines, after a strong Q4 2015. Nokia (Alcatel-Lucent) leads the market in shipments of 200/400G DWDM ports.
Significant fraction of the 100G DWDM ports shipped by Huawei in Q1 2016 went to China Mobile, but demand from other customers is picking up as well. Bidding results for Q2 2016 indicate a sharp increase in orders for 100G DWDM ports from China Unicom.
It is interesting that demand for 100G optics from China is setting new records, while the capex of the Chinese service providers is expected to decline by 20% in 2016. Reduced spending suggests that the initial phase of major infrastructure upgrades is reaching completion, but deployments of DWDM optical ports tend to continue for many years after that. Large service providers tend to add capacity incrementally by lighting up more DWDM ports in response to increasing network traffic.
Several equipment vendors, including Huawei, also reported steadily increasing demand for 100G DWDM connectivity from service providers in Europe and North America as well as large enterprises and cloud companies. The diverse customer base should sustain growth in this market segment in the rest of 2016.
The latest forecast report projected a 30% increase in global shipments of 100G DWDM ports in 2016. Given the record-high first quarter this year, the market will exceed those projections by 20% in terms of the number of units shipped. Growth in revenues of suppliers will be offset by price declines, but majority of vendors should see at least 20% increase in sales of 100G DWDM products in 2016.