Taiwan's optical communication devices vendors including EZconn and Browave are poised to gain new growth momentum in the second half of the year from growing penetration of higher-specs solutions in optical communication infrastructure projects and datacenters in the US and Europe, according to industry sources.
Optical networks construction in the US and Europe is accelerating with handsome government subsidies as the pandemic continues to ease, with 10G GPON (gigabit-capable passive optical network) and EPON (Ethernet PON) increasingly incorporated for optical communication applications there, the sources said.
With stable order visibility for 2022, EZconn said its orders from Europe, particularly for fiber-to-the-home solutions, can keep its production lines busy through the fourth quarter of the year.
Its first-half 2022 shipments of optical devices for datacenter applications, mainly to the US clients, have already equaled its annual shipments for the segment in 2021, the company disclosed, adding that it plans to set up a new production line in Taiwan to better serve customers.
EZconn said global inflationary pressures are driving up materials costs and supply chain adjustments are affecting its component inventory management, production efficiency and delivery lead times. But the company stressed it will still manage to score a slight revenue gain in 2022 and maintain gross margins at 25% through improving shipments portfolios.
The company also noted its revenue ratio for optical communication products will rise to 65-70% by the end of the year from 60%, and the ratio for another major product line, RF connectors, will fall gradually.
Another dedicated supplier Browave pointed out its 2022 revenue growth momentum mainly comes from three major applications: 400G/800G fiber harness for datacenters, branch and WDM (wavelength division multiplexing) solutions for next-generation PON, and WDM products for next-generation cable TVs (CATV).
The company said it has sent sample fiber harness for 2x400G transceivers to clients for validations, with volume production set for the second half of 2022. Its fiber harness for 1x800G transceivers is expected to start contributing revenues in 2023.
Driven by strong demand for optical devices for broadband connectivity infrastructure and datacenter applications, Browave's January-May 2022 revenues jumped 48.9% on year to NT$1.36 billion (US$45.82 million).
The company indicated its production capacity for 32G transceiver modules is expected to sustain full utilization through the end of the year, which will further drive its revenue gains in the second half of the year.
Its 400G transceiver modules, already validated by major US datacenter operators, may enter volume production in the second half of the year to meet the replacement boom for 400G switches paired with corresponding transceiver modules in 2023, the company said.