Despite the continued downturn in expenditures for telecom components, 2002 was surprisingly strong for suppliers of MEMS (Micro-electro-mechanical systems)-based solutions to the optical networking market, reports In-Stat/MDR. The high tech market research firm attributes much of this to the fact that many of these devices have passed Telcordia standards, giving them real respectability within the market. As a result, a number of companies saw their shipments move beyond sampling and into volume production in 2002.


Even though near-term market conditions will remain tough, the long-term prospects for the communications market remain very strong. As a result, although the market for MEMS in optical networking may be down from previous forecasts, it is by no means out, with revenues seeing a CAGR of 41.8 percent through 2007.

"While device reliability is no longer an issue, company stability is. 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," says Marlene Bourne, a senior analyst with In-Stat/MDR. Even so, those remaining in the market were still able to raise more than $55 M in venture capital funding throughout 2002.

In-Stat/MDR also found that:

  • In 2002, there was strong movement of 3D switches into the market. Since these switches have a very high price point, their sales generated significant levels of revenue.
  • MEMS suppliers can expect a strong increase in customer demand and design wins in the 2004/2005 timeframe. This will translate into real revenue growth in 2006 and 2007. Up until then, the market is slowly moving forward with increased sampling and unit shipments to a greater number of customers.