Is a datacom and telecom mini-boom taking place?

A reader commented that both semiconductor and optical transceiver lead-times are being extended and that the “good times are here”.  But what is the cause, he asked, and are good times really here?

Daryl Inniss believes it is largely a reflection of cutbacks that have run their course. “The industry cut back swiftly and deeply when the market started to tank, cutting suppliers and capacity,” says Inniss, practice leader, components at market research firm Ovum.

“I think it's recovery dynamics - people ordering a tiny bit more and there are no parts available such that lead-times are stretching out simulating a boom.”

Brad Smith, LightCounting

Carriers supported the demand with inventory. “Now the industry needs to support both deployments and inventory and with the traffic continuing to grow suppliers cannot meet demand,” he says. Moreover this “bull-whip effect” impacts most severely suppliers furthest removed from the carriers i.e. component vendors.

Brad Smith, senior vice president at optical transceiver market research firm LightCounting, also explains the situation based on events last year.

“There is a shortage of certain parts in optical and semis as a result of cutbacks in manufacturing during 2009,” says Smith, “I think it's recovery dynamics - people ordering a tiny bit more and there are no parts available such that lead-times are stretching out simulating a boom.”

Late last year a research note highlighted industry reports that shortages were becoming more widespread, including components such as integrated circuits and fiber optic transceivers.

However one leading optical transceiver vendor commented that it is shipping everything it can make and that it can’t build stuff fast enough.

So is there a mini-boom after all?