Passive optical component market

Market Overview

Passive components are primary components in the optical network systems. Majority of components including optical couplers, optical power splitters, optical connectors, optical amplifiers, optical transceivers, fixed and variable attenuators, optical circulators, and optical filters. Moreover, these components are used in a loop feeder, a synchronous optical network (SONET), hybrid fiber-coaxial cable (HFC), interoffice, the fiber in the loop (FITL), and synchronous digital hierarchy (SDH) systems.

The global Passive Optical Components Market is estimated to account for US$ 190.1 Bn in terms of value by the end of 2028.

Market Dynamics- Drivers

1. Increasing requirement for bandwidth is expected to drive growth of the global passive optical components market during the forecast period

Currently, there is a massive demand for higher bandwidth in the market. Many IT professionals have admitted the increased demand for higher bandwidth. This is owing to increasing number of subscribers that bring in more devices connected to networks. According to Coherent Market Insights’ analysis, The African region is expected to witness the highest demand for bandwidth by accounting for over 50% CAGR. The bandwidth demand in the Asian market is expected to rise at a CAGR of over 30%. Moreover, according to the same source, the global internet protocol (IP) traffic increased by eightfold till 2010 and it is expected to quadruple by 2015, as more consumers are using the internet. Therefore, these factors expected to drive growth of the global passive optical components market during the forecast period.

2. Energy-efficient solutions are expected to propel the global passive optical components market growth over the forecast period

Passive optical local area network (POL) solutions are more eco-friendly, as compared to conventional copper-based Ethernet local area network. POL solution uses optical splitters instead of workgroup switches Traditional copper-based networks provide 100/1000base Ethernet connectivity to all the desktop devices such as desktop computers, voice over IP phones, laptops, and video phones to workgroup terminal (WGT). Passive optical network (PON) uses a single fiber, single type optic to the WGT. In addition, PON uses small passive optical splitters, located at the enclosures in a building, usually on every floor. Hence, PON does not produce heat, requires no power, and can be mounted in electrical closets. Therefore, these factors are expected to propel the global passive optical components market growth in the near future.

Statistics:

Asia-Pacific held dominant position in the global Passive Optical Components Market in 2020, accounting for 38.6% share in terms of value, followed by North America, Europe and Rest of the World respectively.

Figure 1: Global Passive Optical Components Market Share (%), in terms of Value, By Region, 2020

Market Dynamics- Restraints

1. Rising preference for wireless broadband is expected to hinder the global passive optical components market growth over the forecast period

Many end users are increasingly preferring wireless broadband, which is posing a major challenge for the market. Since mobile technology is developing rapidly, the use of smartphones and tablets is increasing at the same pace. 4G LTE networks provide high-speed Internet connectivity, which is beneficial for mobile users. As a result of this, service providers are more inclined towards advanced LTE. Thus, these factors are expected to hinder the global passive optical components market growth in the near future.

2. Loss of data is expected to hamper growth of the global passive optical components market during the forecast period

Since optical fiber cables have a limited bend radius of around 30mm, bending beyond the limit can lead to data loss up to some extent. Data carried by the cables can be hacked from leaked signals. Though bending optical cables is difficult, it can be done, as they are not totally tamper-proof. This leakage is known as bend loss, which is the loss of signal strength which could compromise the integrity of data transmitted. Hence, these factors are expected to hamper growth of the global passive optical components market during the forecast period.

Market Opportunities

1. Advancements in technology can present major business opportunities in the global passive optical components market

There are PON technologies used namely NG-PON and XG-PON with upstream and downstream speed. NG-PON and XG-PON are expected to contribute to the evolutionary growth of the existing passive optical networks. Furthermore, XG-PON will co-exist with the current fiber structure of PON, which means deployment of the new advanced technology will not incur additional costs.

2. Massive growth in Europe can provide lucrative growth opportunities in the global passive optical components market

Passive optical networks (PON) offer benefits such as high-scalability, reliability, ease of use, energy savings, environmental sustainability, optimized bandwidth connectivity, advanced security, and lowest total cost of ownership. PON offers multiple benefits and this is increasing its popularity. PONs can accommodate the rising demand for bandwidth with additional benefits. Rising demand for bandwidth and high data rates are fuelling growth of PON in the European region.

Figure 2: Global Passive Optical Components Market Value (US$ Bn), 2017 - 2028

The global Passive Optical Components Market was valued at US$ 38.1 Bn in 2020 and is forecast to reach a value of US$ 190.1 Bn by 2028 at a CAGR of 19.3% between 2021 and 2028.

Market Trends

1. Rising investment by market players

Major companies are focused on investments, in order to enhance the market presence. For instance, Adtran, Inc. invested US$ 125.9 million, US$ 100.3 million, and US$ 90.3 billionon research and development activities in 2012, 2011, and 2010. In 2012, Alcatel-Lucent invested US$ 3.3 billion on research and development. Furthermore, in 2013, Alliance Fiber Optic Products, Inc. invested US$ 3.7 billionin R&D.

2. Research and development activities by market players

Major companies are focused on research and development activities, in order to enhance the product portfolio. In October 2013, Alcatel-Lucent launched EPON solutions, enabling cable operators to focus on growing business market. In December 2013, Alliance Fiber Optic Products, Inc. launched LC Duplex EMI Adapters. In May 2012, Alliance Fiber Optic Products, Inc. launched LC and SC adapters consisting of internal and external shutters.

Global Passive Optical Components Market- Impact of Coronavirus (Covid-19) Pandemic

Due to Covid-19 pandemic, many industries witnessed significant shift in their business. Every country has announced lockdown to contain the spread of coronavirus. As people are staying at home and curious to know more updates on coronavirus has increased the demand for the news channel. For instance, in April 2020, according to Broadcast Audience Research Council (BARC), total TV viewership increased to 21% from 7%, as most of the people watched news channel to get updates of the COVID-19. Streaming services such as Netflix, Amazon Prime Video, and Zee5 are used by people for entertainment which increased the pressure on networks. This is owing to increasing number of subscribers that bring in more devices connected to networks. Due to the rising demand for high bandwidth the demand for passive optical components market is increased.

Value Chain Analysis

The companies manufacture the passive optical components and customize them to meet the requirements of the end users. While a few companies have their own distribution channels, others outsource them. These distribution channels help the manufacturers to deliver standard or customized components to the commercial or industrial end users. The end-use segment of the market includes commercial and personal applications. The commercial applications segment includes corporate offices, public buildings, banks and hospitals. On the other hand, the industrial applications segment is inclusive of all end-use industries of passive optical components such as medical, aviation, semiconductors, electronics, healthcare, telecommunication and military.

Competitive Section

Key players operating in the global passive optical components market are Adtran, Inc., Hitachi Communication Technologies America Inc., Alcatel-Lucent, Freescale Semiconductor, Inc., Alliance Fiber Optic Products, Inc., Freescale Semiconductor, Inc., AT & T Inc., Ericsson, Inc., Broadcom Corporation, Inc., ECI Telecom, Ltd., Calix, Inc., and Cortina Systems, Inc.