CIOE Conference - China Optical Component Makers Growing More Competitive in the 10G-40G Segment
At the 15th China International Optoelectronic Exposition (CIOE) in Shenzhen last week, it was apparent that China-based optical network component makers are aggressively going after market share in the 10G-40G telecom and datacom segments by offering good-quality products at inexpensive prices.
Greater Competition in the 10G-40G Optical Segment
More than 1,000 optical network component makers attended The 15th Annual CIOE in Shenzhen. China optical component suppliers accounted for more than 90% of the companies attending the event.
Sources said Finisar Corp. is facing stronger competition from China-based manufacturers in the 10G–40G optical component market segments because their prices are higher compared with what is being offered by other suppliers (similar to trends in OTR Global’s July 18 note).
At the exhibition, sources said Finisar is pricing its 10G optical transceivers at a 30% premium compared with Chinese vendors, such as Accelink Technologies Co. Ltd., (002281 CH), XGIGA Communication Technology Co. Ltd., Huagong Tech Co. Ltd. (000988 CH) and InnoLight Technologies Corp. One said, “We are also planning to increase our purchases with Avago [Technologies Ltd.] and NeoPhontonics [Corp.]. In particular, we want to order in the 10G segment from these companies because they are offering a much cheaper price compared with Finisar for basically the same quality.”
Sources said Finisar is working hard to reduce prices in the 10G-40G market segments by shifting production from Shanghai to a new Wuxi factory. However, they were skeptical as to whether Finisar could compete with the Chinese optical component suppliers on the basis of pricing. Several sources said Finisar would only be able to reduce their optical component prices in the 10G-40G market segments by about 15% yy based on estimated production cost reduction when they move to the new Wuxi factory. One said, “Chinese optical component suppliers will gain share in 2014 by offering the same quality the international vendors offer at a cheaper price.” (OTR Global’s July 18 note reported Finisar might be able to reduce its 2014 overall OPEX by about 20% yy as the new Wuxi factory kicks into production.)
Attendees Discussed Oclaro
A hot topic of discussion among conference attendees focused on Oclaro Inc.’s future business prospects and its impact on the optical component market. Sources said it was too early to tell if any changes in their relationship with Oclaro would happen. One said, “We increased our orders on CFP 2 and 10G modules last quarter with Oclaro because of its strong technology and cheaper price compared with Finisar and JDSU [JDS Uniphase]. ... Oclaro’s [financial issues] won’t stop us from buying from them. We may only change our procurement policy in 2014, but for now, we will keep buying from Oclaro because they have good quality and cheap prices.”
Silicon Photonics Maturing and Gaining Attention
Silicon Photonics is maturing fast, according to sources, and gaining the attention of equipment makers. In particular, sources said Cisco System Inc.’s in-house CPAK transceivers were getting a lot of attention at the exhibition from carriers because the technology is able to provide smaller transceivers, larger capacity and faster connection speeds compared with the current offering of 100G optical transceivers.
WHAT: 15th China International Optoelectronic Exposition (CIOE)
WHERE: Shenzhen, China
WHEN: Sept. 4-7
WHO: More than 1,000 optoelectric companies on 100,000 square meters of floor space
