Page 41 - Market Analysis Report of Optical Communications Field in China & Global market 2018

the second half of 2017 to the first half of 2018 showed that the optical market concentration of the industry is on the rise. In the future, with the
network market in 2018 remained the world's brightest spot. Therefore, the further improvement of the integration and intelligence of optoelectronic
Asia-Pacific region is still an important incremental market. devices, the proportion of optical parts in the total cost of optical system
equipment will continue to rise, which will reach more than 30%.
The slowdown in demand in the U.S. equipment industry is largely due to
lower expensable costs as carriers compete for wireless spectrum. From the technical point of view, ultra-high speed, super-capacity and
long-distance are still the main direction of the development of optical
Huawei still Dominating the Global Optical Network Device Market communication. Ultra-high speed, super-capacity and long-distance optical
From the global market for optical transmission and network access transmission equipment, as well as the development, upgrading, and
devices, Chinese companies keep strong performance, with Huawei, ZTE application of intelligent optical networks which have received the most
and FiberHome still occupying a large market share. To be more specific, attention in the market, will push technology trend of optical device industry
Huawei is firmly in the leading position, with a global market share of 29% to focus on optical parts used in intelligent optical networks and increasingly
for optical transmission and network access devices, with Nokia ranking high-speed integrated optical devices. The flexibility of the intelligent optical
second with 11% market share, Ciena ranking third with 12% market network system depends mainly on the intelligent and dynamic tunable level
share, ZTE ranking fourth with 12% market share and FiberHome ranking of the optoelectronic devices and modules. Therefore, optoelectronic devices
fifth with 11% market share. The rest five including Fujitsu, NEC, ADVA, and modules with multifunctional integration and tunable parameters are the
Infinera and Sumitomo Electric respectively account for market share of 8%, core and foundation of intelligent optical network, and the key to construct
6%, 3%, 4% and 1%. These 10 companies share 97% of the global optical the next generation intelligent optical network. In the aspect of ultra-high
transmission and network access device market, showing a strong market speed transmission, technological focus is on high-speed Ethernet and
competitive advantage. backbone network with 40 and 100 Gbit/s as the main rate.
Figure 23 Global optical network device manufacture's market share
Telecom market + data center market promote the sustained prosperity of
optical parts industry. At present, telecom operators market accounts for
two-thirds of the downstream market of optical devices, data center market
accounting for the rest one-third. Therefore, the telecom operators market
is still the main driving factor nowadays, while the data center market
is increasing sharply at an annual compound growth rate of 30% and is
expected to be the next main market driver.

The global optical parts market scale is about $10.2 billion in 2017, with the
top 10 suppliers accounting for 62 percent of the global market.
Figure 25 Global optical part enterprise market share
II. China’s Optical Communication Equipment Market
In 2017, China's optical communication equipment scale was 98.79 billion
yuan, accounting for 40.2% of the communication equipment market, an
increase of 8.7%.
Figure 24 2017 China's Optical Communication Equipment as a
Proportion of Commnunication Equipment Market
Unit: RMB 100 million yuan

II. China’s Optical Parts Market
After years of development and accumulation, China has become a large
country in optical part production in the world. However, in the field of
optical parts, Chinese manufacturers are still mainly in packaging business,
all kinds of high-end chips and core devices are highly dependent on imports,
which not only can not share the lucrative profits in the industrial chain, but
also is a serious threat to the country's communication security. In 2017,
In 2017, in view of the increase in the strategic position of information ZTE was forced to pay huge fines due to the sanctions imposed by the U.S.
security, China attaches more importance to the development of domestic Department of Commerce, fully exposing the seriousness of the lack of chips
communication equipment and domestic manufacturers. Therefore, from in China's optical part industry.
the competition pattern, the market position of domestic manufacturers is
increasing day by day. Among them, Huawei, Fiberhome and Shanghai Bell The development of optical communication industry in China is uneven. The
are still leading. Chinese enterprises, represented by Fiberhome and Huawei, market share of optical equipment manufacturers accounts for half of the
are expanding their market share in optical communication equipment due world, and that of optical part enterprises is only 13 percent. China’s optical
to their competitive position as well as their emphasis on sales channels and communication industry chain can be divided into optical chip, optical part/
services. module and optical network device from upstream to downstream.

The low growth pattern is expected to continue in 2018, but by 2019 the III. 2018 China’s Telecom Operators’
market will gradually go up as construction of the 5G network starts and
broadband growth starts. Dynamic Analysis
3.Scale and Features of Optical Parts Market Figure 26 Interim Report 2018 of Three Major Operators in China
I. Global Optical Parts Market
Thanks to the opening-up policies, applications for IDC licences, emerging
industries such as big data and cloud computing, together with a large
number of data centers lent from telecom operators or built by Internet
service providers, corporation and governments, optical communication
market begins to enter the high-speed growth period.
From the global perspective, the United States and Japan, the main R & D
base, are in the leading position in the technology level, R & D investment,
and intellectual property rights, owning the scale advantage. The number
of optical parts manufacturers is relatively large, with more than 250 in
the world. The industry as a whole is in a completely competitive market,
and industry competition is more intense. With the withdrawal of small
and medium enterprises and the merger and acquisition of the industry, the
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