Different from the IC industry's professional division of labor from IDM (vertical integration manufacturing), China's large optical device companies are accelerating the evolution to the IDM model. It is characterized by the integration of optical device module manufacturing companies and the integration of optical chip manufacturing. This indicates that China's optical device companies are breaking through the bottleneck of upstream chip technology and their core competitiveness in the field of optical communications has been strengthened.
According to experts, the complete optical fiber communication network covers three major parts, namely fiber optic cable, optical components and optical system equipment, while optical components account for about 70% of all output values. As China's optical communications market continues to heat up, investment in the optical device industry continues to expand, and the number of manufacturers has increased rapidly. A large number of optical device companies have emerged in China. Moreover, due to the technology-intensive and labor-intensive nature of the optical device industry, foreign manufacturers have set up factories in China due to cost considerations, coupled with the growing attractiveness of China's optical communications market, the global optical device manufacturing industry is shifting to China. Become an inevitable trend. The surge in suppliers has intensified competition in the industry, and the situation of oversupply in the market has gradually formed. The competition in the industry characterized by price wars has been escalating.
Since last year, China's optical communications industry has entered a new stage of development through the construction of 3G and FTTx (Fiber Access) networks. This has caused the demand for optical devices in China to peak again, and even the phenomenon of short supply. However, the manufacturers found that this did not change the fierce situation of market competition, the price war remained, and the profit growth was not obvious. What is the reason? The author believes that in addition to the optical device market itself is already a mature buyer's market, the supplier's bargaining power is weak, another important reason is that the optical chip upstream of the optical device is still dependent on imports, and the procurement cost of the optical chip is difficult to reduce.
Although China's optical device companies have an advantage in labor costs and the manufacturing process of modules is relatively mature, but because they do not master the core technology of upstream optical chips, Chinese manufacturers cannot provide optical chips that meet the needs of optical modules such as FP, DFB, and APD. Device module manufacturers can only buy products from foreign manufacturers. However, in the key part of the upstream chip of the optical device industry chain, it is one of the main reasons why the cost of the optical device module is difficult to reduce. Therefore, as soon as possible to improve the research and development capabilities of optical device companies, independent research and development of optical chips has become the key to breaking this situation.
We are pleased to see that optical device companies with vision and strength have recognized this and have already taken action. Through continuous efforts, some optical device companies have made breakthroughs in the independent research and development of optical chips, and achieved mass production. Moreover, it is understood that some optical chips can not only meet 90% of their own optical module products, but they are expanding the chips production capacity and preparing for external sales. The vertical integration manufacturing from module to chip is the way for Chinese optical device companies to seek development and growth. It is foreseeable that manufacturers with chip manufacturing capabilities will have stronger market competitiveness, and they will become the market protagonists in the international competition in China.
