Preface • Work summary

Over the past year, the global communication market has been growing vigorously. Around the world, the construction of optical fiber networks, fiber to home, large data centers, etc. has been promoted, and the demand for fiber optic cables, optical transmission, optical devices and other fields has been rising. However, due to the further improvement of China's 4G construction and the fact that 5G has not yet entered the obvious dividend period, the growth rate of global optical fiber and cable market in 2018 has slowed down compared with that before.

Network Telecom information Research Institution has engaged in the competitiveness assessment of Global/China optical fiber & cable enterprises for 13 years. “The Top 10 Competitiveness Enterprises in the Global Optical Fiber & Cable Field in 2019” clearly displays the competitive situations of main optical fiber & cable enterprises in 2019. According to the research data and the monitoring results of the competitiveness of optical communication enterprises, it can be seen that China's huge infrastructure construction tasks, 4G densified construction, old optical fiber renewal are still driving the performance of optical communication enterprises to be outstanding, and the leading enterprises in China's optical communication, optical fiber and optical cable, optical transmission and optical devices and other fields still have made satisfying achievements.

The research shows that companies in top 10 competitiveness enterprises of global fiber & cable market list are divided up by four countries, namely, the United States(Corning), Italy(Prysmian), Japan(Furukawa Electronic/OFS, Sumitomo Electric, Fujikura), and China(YOFC, HTGD, FiberHome, Futong, and ZTT), with Chinese enterprises occupying half of the list. YOFC, HTGD and FiberHome occupy a large market share. That is, YOFC ranks second in the world with 12% market share, while HTGD ranks third with 11% market share. FibrtHome, Futong, and ZTT respectively ranks fifth, sixth and ninth with market share of 7%, 8% and 8%. Corning, Furukawa Electric/ofs, Sumitomo Electric, Prysmian, Fujikura take up market share of 15%, 10%, 5%, 6%, and 4% respectiy.

Viewing from the entire global optical transmission and network access equipment, HUAWEI stabilizes its leading position with competitive score exceeding second Nokia of 71 points. Ten companies in this list come from five countries: Finland(Nokia), Japan(Fujitsu, NEC, Sumitomo Electric), the United States(Ciena, Infinera), China(Huawei, ZTE, FiberHome), and Germany’s(ADVA). HUAWEI ranks first by sharing 21% of global optical transmission and network access equipment. Nokia locates No.2 with its 13% of market share. Ciena is listed No.3 with its 12% market share. FiberHome is in No.4 location, with market share of 13%. And Fujitsu is in No.5 location with its market share of 7%. ZTE falls to sixth place due to the injunction of United States. NEC, ADVA, Infinera and Sumitomo Electric occupy 4%, 3%, 5% and 1% market share respectively.

Global optical transmission technology is the new development direction of information transmission technology, and China is the largest optical communication market in the world. HUAWEI, ZTE, FiberHome and other enterprises have become the leading enterprises in this industry after years of efforts. Figure 2 is the market share of global optical transmission and network access equipment manufacturers.

The global market size of optical components in 2018 is about US $10.3 billion, increases less than 1% than last year. While the global data center optical module market scale in 2018 is about US $3.7 billion, with a year-on-year growth of 12.12%.In 2018, with the alteration of new technology, enterprise merger and acquisition, and developing markets, important changes have taken place in the global optical components market, including technical direction, product selection, access mode of developing markets, etc. As shown in Figure 3 is the scale of the global optical components market from 2018 to 2022:

Among the top 10 optical components manufacturers in the world, three are from the United States, three are from Japan, and the remaining four are from China. This proves that Chinese companies have made great progress in the field of optical components and are narrowing the gap with United States and Japan. Accelink is still in the fourth place this year, the same ranking as last year, while Zhongji Innolight, Hisense Broadband Multimedia, and O-NET ranks 6th, 7th, and 10th, respectively. II-VI, Broadcom and Lumentum ranked in the top three with comprehensive competitiveness scores of 1000, 993 and 976 points respectively, and there was no significant difference in competitiveness. In terms of market share, II-VI, the first-ranked company, occupies 10% of the market share, while Broadcom and Lumentum, the second-ranked and third-ranked companies, occupy 8% and 8% respectively. Accelink, the fourth company, occupies 5% of the market share, while Zhongji Innolight, Hisense Broadband Multimedia and O-NET, the other three Chinese companies, rank 6th, 7th and 10th with 6%, 4% and 2% of the market share respectively. Sumitomo Electric, Fujikura and Furukawa Electronic have market share of 5%, 4% and 3% respectively.

In 2019, the prosperity index of China's optical fiber and cable market has declined for the first time. The revenue growth of listed optical fiber and cable enterprises has slowed down, and the total market value fluctuated significantly. At the same time, the investment and financing activity has been less active, the supply side of the entity economy has structurally reformed together with the trade war. Thus the industry has entered a new era of transformation adjustment. Network Telecom Information Research Institute has issued the prosperity index of China's optical fiber and cable market for five consecutive years since 2015, hoping to provide valuable decision-making reference for industry colleagues to deeply understand the latest situation and development trend of the optical fiber and cable industry.

(I) The industry is still at the low peak of the prosperity range, and prosperity index has dropped significantly The coincident index and the leading index both decrease. In the second quarter of 2019, the coincident composite index of China's optical fiber and cable market is 100.82 (Q2 = 100 in 2017, similarly hereinafter), decreasing by 0.04 points than the previous quarter; the leading composite index is 100.68, decreasing by 0.14 points than the previous quarter; the lagging composite index is 100.57, rising by 0.66 points than the previous quarter. The three indexes are all greater than 100, and the development of China's optical fiber and cable market is still at the low peak of the prosperity zone. However, the coincident index, the leading index and the lagging index are all declining, indicating that the industry will enter a new stage of transformation and adjustment.

(II) The growth rate slows down at high level, and the decline is significantly increased

The revenue growth falls to 10.7%. In 2018, the revenue of listed optical fiber and cable enterprises has reached 50.551 billion, increasing by 10.7% than last year. From 2014 to 2017, the growth rate was 13.4%, 15.4%, 15.5% and 32.4% respectively. In
2018, the growth rate of the industry has decreased by 21.7 percentage points compared with that in 2017, showing a trend
of significantly accelerated decline. At the same time, the overall operating efficiency of the industry has declined, and the
proportion of capital expenditure in revenue has increased slowly.

The optical communication industry is still in the period of value inflow. The market-value-to-scale ratio, proposed by Slywotzkyin 1999, is mainly used to measure the value transfer between industries. As of 2018, the market value scale of listed optical communication enterprises has reached 4.43, which is less than 2017, but still higher than the critical point of threshold 2. Therefore the industry is in the value inflow period of high growth and high income level.

(III) The industry will continue to develop sustainably
In 2019, with the structural reform of the supply side, the implementation of various policies, and the accelerated penetration of information technology, the demand for intelligent and high-quality consumption will continue to upgrade. And this will promote the sustainable and healthy development of the upstream industry, further accelerate the integration with the entity economy, and promote the wide application of new technologies and keep expanding new industries.

In addition, the new kinetic energy is expected to develop rapidly. 2019 is the pivotal year for 5G commercial deployment. The industry, research and application will work together to promote standards, R&D, testing and safety supporting work. By accelerating the maturity of the industrial chain, the application based on 5G will continue to innovate, which will directly benefit the fiber optic cable industry.

From 2019 Q2 to 2019 Q3, based on the precipice decline of the industry in the first half of the year, the development leading index of China's optical fiber and cable industry shows a downward trend. In the next two quarters, the consensus index may slightly decline, but it shall remain at about 100.5, which is at the critical point of the boom transformation. Although the current China's optical fiber and cable market is significantly affected by changes in market supply and demand, it still faces great pressure in the short term. It is predicted that in the next two quarters (2019 Q4 and 2020 Q1), China's optical fiber and cable industry will continue to be in a downturn, with a range of 5%-15% slowing down. But in the future, with the launch of 5G large-scale network construction and data center, the industry outlook is bright with plenty of opportunities.

In the end, I’m honored to express my sincere gratitude to all partners in optical communication industry for their longterm help and support on behalf of all staffs of “The Annual Top 10 Competitiveness Enterprises in the Global/China Optical Communication Field”. Thank you!

Ranking of "The Top 10 Competitiveness Enterprises in the Optical Communications Industry of Global & China market in 2019"


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