With ICE6’s technology winning, 800G dominance is a possibility



KEY POINTS
  • Infinera is positioning itself to take advantage of bandwidth demand growth driven by COVID-related remote access, 5G wireless rollouts, and overall global growth. The high-end optical market (600G+) is expected to grow 25% a year through 2024 to over $2bn annually (according to Ovum).
  • Infinera’s 5th gen optical engine (ICE6) has been showing well in trials (especially with Verizon this summer). With Huawei security concerns, there are now only two vendors at 800G (Infinera and Ciena) – down from 8+ for 3rd gen and 4th gen.
  • ICE6 beats the 800G competition with 4x longer reach and a 25% cost advantage. At 600G, the reach advantage is 2.5x and cost advantage is 35%. These advantages could be why Ciena’s outlook is for a broad decline, while Infinera is looking for growth. The 3Q is seasonally down but the company guided for sequential growth in 3Q20 and 4Q20.
  • The world is in the early stages of a 600G ramp with its lower price/bit and lower power consumption. The company added six new 600G customers in 2Q20 to a total of 16, including one major ICP.
  • After 11 years as CEO, Tom Fallon is planning on be stepping down and David Heard, the Company's Chief Operating Officer, is expected to be taking the helm by the end of 2020.
  • The company is expecting step-function margin expansion in 2H21. This will likely be driven by 600G rollouts first, then by 800G. Some COVID-driven supply issues continue but have lessened recently. Marketing and sales are lower as an ERP upgrade and the Coriant integration are done. F3Q20 earnings are expected to be released on 6-Nov-2020.

COMPANY OVERVIEW

Infinera provides optical transport networking equipment, software and services to telecommunications service providers, Internet content providers (ICPs), cable providers, wholesale and enterprise carriers, research and education institutions, enterprise customers and government entities across the globe. The company's portfolio consists of the Infinera DTN-X Family, the Infinera DTN platform, the Infinera Cloud Xpress Family, the Infinera XTM Series, the Infinera XTG Series and the Infinera FlexILS platform, addressing long-haul, subsea and metro networks end-to-end. Its technology includes Infinera Intelligent Transport Network Architecture, Infinera Photonic Integrated Circuits, Infinera FlexCoherent Processor, Super-Channels, Sliceable Photonics, Disaggregation, Integrated Digital Switching, Infinera Instant Bandwidth, Infinera Packet-Optical Transport, Multi-layer Switching and Optimization, and Management, Control and Security.

 Infinera is positioning itself to take advantage of bandwidth demand growth driven by COVID-related remote access, 5G wireless rollouts, and overall global growth. The high-end optical market (600G+) is expected to grow 25% a year through 2024 to over $2bn annually (according to Ovum).

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