ANALYSIS & OPINION: SHOW REVIEW
Califor nia CONTEMPLATION
Keely Portway reports from the OFC 2019 Conference and Exhibition in San Diego, where it was apparent that, while some of the challenges facing the industry are unlikely to disappear, neither are the high levels of innovation and product development
KEELY PORTWAY
IT’S AN EXCITING TIME IN THE INDUSTRY. THE DEMAND FOR OPTICS IS VERY STRONG, SO WHY ARE WE BRINGING UP THE WORRYING QUESTION OF PRICING?
I
f we cast our minds back to a litle over a year ago to the 2018 OFC Conference and exhibition in San Diego, we might remember that it opened its doors just as news broke
that Lumentum had acquired outstanding Oclaro common stock in a $1.8 billion agreement. Consolidation was understandably a hot topic at the event, and has been equally prevalent in the year since. Fitingly, as some 15,400 delegates arrived
at the San Diego Convention Centre for OFC 2019 in March, it was announced that Lumentum had agreed to sell certain optical transceiver product lines to Cambridge Industries USA. Tose acquired lines were developed and manufactured by Oclaro. Other notable mergers and acquisitions
(M&As) in the past 12 months include: Infinera’s acquisition of Coriant; Ciena’s purchase of Packet Design; Cisco securing Luxtera; II-VI’s incorporation of Finisar and Nvidia’s acquisition of Mellanox. With many of the larger and more widely-
recognised businesses already having been touched by M&As at some level, does this mean that things will realistically begin to calm
10 FiBRE SYSTEMS n Issue 24 n Summer 2019
down going forward? Not necessarily, according to Woo Jin Ho, senior analyst at Bloomberg Intelligence, who spoke as part of the OFC State of the Industry analyst panel, looking at why M&A is here to stay. ‘2018 was a very active year in M&A,’ he explained, referencing the aforementioned transactions and some of the driving factors behind them – such as the pooling of technology and IP, increasing market share, or expanding into complementary markets.
Driving forces Looking at the bigger picture, Ho believes there are two key areas driving industry consolidation. ‘Number one,’ he said, ‘is China, which has been investing heavily in the optical infrastructure. Number two is the internet cloud provider, which has been investing heavily in data centre interconnect (DCI).’ Going on to say that the market landscape
might be different without the Chinese market or cloud providers, Ho explained: ‘Te challenges may grow and Made in China 2025 will create more consolidation. China wants to supply 30 per cent of domestic demand for optical components by 2022.’
www.fibre-systems.com @fibresystemsmag
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