Will the optical communications industry be the “survivor” of the COVID-19?

In March, 2020, LightCounting, an optical communications market research organization, evaluated the impact of the new coronavirus (COVID-19) on the industry after the first three months.

The first quarter of 2020 is nearing its end, and the world is plagued by the COVID-19 pandemic. Many countries have now pressed the pause button on the economy to slow the spread of the epidemic. Although the severity and duration of the pandemic and its impact on the economy are still largely uncertain, it will undoubtedly cause huge losses to humans and the economy.

Against this grim background, telecommunications and data centers are designated as essential basic services, allowing continued operation. But beyond that, how can we expect the development of the telecommunication/optical communication ecosystem?

LightCounting has drawn 4 fact-based conclusions based on the observation and evaluation results of the previous three months:

China is gradually resuming production;

Social isolation measures are driving bandwidth demand;

Infrastructure capital spending shows strong signs;

The sales of system equipment and component manufacturers will be affected, but not disastrous.

LightCounting believes that the long-term impact of COVID-19 will be conducive to the development of the digital economy, and therefore extends to the optical communications industry.

Paleontologist Stephen J. Gould’s “Punctuated Equilibrium” believes that species evolution does not proceed at a slow and constant rate, but undergoes long-term stability, during which there will be brief rapid evolution due to severe environmental disturbances. The same concept applies to society and economy. LightCounting believes that the 2020-2021 coronavirus pandemic may be conducive to the accelerated development of the “digital economy” trend.

For example, in the United States, tens of thousands of students are now remotely attending colleges and high schools, and tens of millions of adult workers and their employers are experiencing homework for the first time. Companies may realize that productivity has not been affected, and there are some benefits, such as reduced office costs and reduced greenhouse gas emissions. After the coronavirus is finally under control, people will attach great importance to social health and new habits such as touch-free shopping will continue for a long time.

This should promote the use of digital wallets, online shopping, food and grocery delivery services, and have expanded these concepts into new areas such as retail pharmacies. Similarly, people may be tempted by traditional public transportation solutions, such as subways, trains, buses, and airplanes. Alternatives provide more isolation and protection, such as bicycling, small robot taxis, and remote offices, and their use and acceptance may be higher than before the virus spread.

In addition, the impact of the virus will expose and highlight current weaknesses and inequalities in broadband access and medical access, which will promote greater access to fixed and mobile Internet in poor and rural areas, as well as the wider use of telemedicine.

Finally, companies that support digital transformation, including Alphabet, Amazon, Apple, Facebook, and Microsoft are well-positioned to withstand inevitable but short-lived declines in smartphone, tablet, and laptop sales and online advertising revenue because they have little debt , And hundreds of billions of cash flows at hand. In contrast, shopping malls and other physical retail chains may be hit hard by this epidemic.

Of course, at this point, this future scenario is just speculation. It assumes that we managed to overcome the huge economic and social challenges brought about by the pandemic in some way, without falling into the global depression. However, in general, we should be fortunate to be in this industry as we ride through this storm.

Post time: Jun-30-2020