Optical modulator market forecast

Fiber Optics Weekly Update, July 4, 2003

According to a new market study by ElectroniCast Corp., North America led global consumption of optical modulators in 2002, with a 40 percent relative market share. Global consumption value will increase at a strong pace of 38 percent per year over the next five years, from $266 million in 2002 to over $1.3 billion in 2007, with rapidly rising quantity growth offset by falling average prices.

Over the 2007-20 12 timeframe, the consumption value growth will continue at an average annual rate of nearly 19 percent, to reach over $3 billion. Japan/Pacific Rim Will Gain Market Share Lead--Eventually says the regional market share of long haul and high data rate links will migrate to Asia from North America. At the end of the forecast timeframe, new build or "green field" long haul/high data rate Asia links will be attributed to China. Optical modulators used (consumed) in the Japan/Pacific region will account for 40 percent of the global market share in 2012.

"Modulators serving the 10 Gbps space will not be the only products needed," said Stephen Montgomery, president of ElectroniCast Corp. "The 2.5 Gbps space is very attractive, with 40 Gbps to make an appearance this year. The main application dynamics (drivers) are optical modulators used with high-speed transmitters that are required to transmit longer distances. The actual assembly of transmitters and boards will trend to the Asian region over the forecast period, Montgomery said.

Evolution of Integration--The integration of laser diodes, photo diodes, transmitter/receiver (T/R) pairs, passive optical components and other optical components has started with the simplest level of hybrid integration in the lower data rate components (155 and 622 Mbps). This will expand steadily into more complex hybrid integration, and into data rate components. Monolithic integration will proceed with E/A-type modulators, and other elements with relatively higher incidence in higher data rate (2.5, 10 and 40 Gbps), E-O modulators will expand to higher data rates; however, the package will be limited to hybrid integration.

Modulators Used in Integration--Manufacturers have started development of integration of laser diode with modulators and optical waveguide fabricated on a single die. Both E-O and E/A modulators are undergoing R & D processes. The main "driver," or main dynamic for the integration of modulators with other components is ECONOMICS; does the packaged deliver a less costly solution. Of course, there are application "drivers," such as:

- smaller package

- less loss

- more control (temperature) of the single package

Competitive alternative solutions to Electro-optical (E-O) including Electro-absorption (E/A), Indium Phosphide (InP) and Mach-Zehnder (M-Z) modulator integration and standalone solutions are being developed. Packaging is the key driver, along with the main multiple: Economics. ElectroniCast summarizes that the engineering and technology advances will be developed. However, without the cost-effectiveness of the component and a suitable package, meeting all specification and customer demands, the modulator product will not be successful. Again, the technology advancements are secondary to the packaging and cost issues.

In the 2003 ElectroniCast report, the optical modulator market is presented in segments:

- Electroabsorption (E/A) Type

- Electro-Optical (E-O) Type

- "Other" modulator type

In 2002, Electro-optical (E-O) optical modulators, typically utilizing Lithium Niobate as a base held 60 percent market share of global consumption. The Electroabsorption (E/A) market share will increase in relative market share over 45 percent by 2012. For more information, visit www.electronicast.com.