SCOTTSDALE, Ariz. -- Despite the continued slump in the telecommunications market, 2002 was surprisingly strong for suppliers of microelectromechanical systems (MEMS) solutions for optical networking, according to one market researcher.
In-Stat/MDR attributed the growth to the fact that many MEMS devices have met Telcordia standards while several companies' products move beyond sampling and into volume production in 2002.
According to the researcher's MEMS report, long-term prospects for the communications market remain strong though current market conditions are tough. While the market for MEMS in optical networking is down from previous forecasts, revenues will grow at a compound annual growth rate of 41.8 percent from 2002 through 2007, it estimated.
Marlene Bourne, In-Stat/MDR senior analyst, said MEMS, like any new technology, is growing from a very small base. Unlike the over optimistic projections of 2001, current forecasts show more "reasonable growth" considering the difficult market environment, Bourne said.
MEMS device reliability is no longer an issue. What continues to plague the market is the viability of MEMS companies. "Fully 50 percent of the companies known to be developing MEMS solutions for optical networking have closed their doors, and the question lingers as to who will be next," said Bourne.
Even so, companies remaining in the market were able to raise more than $55 million in venture capital funding throughout 2002.
As for market trends, there's been a change in the types of MEMS devices entering volume production, and more companies are offering variable optical attenuators and tunable filters. There has also been a shift to small and 3D switches.
In addition, new Asian companies are building small switches for legacy systems rather than devices for next-generation networks that are a harder sell.
In-Stat/MDR projects MEMS suppliers will see a strong increase in demand and design wins in the 2004-2005 timeframe. This would translate into revenue growth in 2006 and 2007.
"Until then, the market is slowly moving forward with increased sampling and unit shipments to a greater number of customers," it said.