Boston, MA - August 23, 2005 -- The market for high speed fiber optic ICs will grow by 27 percent in 2005, from $280 million in 2004, according to "Fiber-optic Analog IC Market and Technology Dynamics," a new report released by the Gallium Arsenide & Compound Semiconductor Service at Strategy Analytics. After a considerable period of stagnation, service providers are once again purchasing optical capacity to meet their growing traffic needs. OC-48 and OC-192 links will be at the center of this growth, and the deployment of high capacity routers will also begin to stimulate OC-768 purchases. Overall, the market will grow at a CAAGR of 24 percent through to 2009.

Since much of the upgrades will be for backbone infrastructure, GaAs IC vendors will be at the heart of this development. While GaAs TIAs and post amplifiers will see increased competition from-mainly SiGe--alternatives, the crucial laser driver function will remain largely the domain of GaAs at higher speeds.

Despite this positive outlook, Strategy Analytics warns that industry consolidation will be required to counteract the effects of oversupply and intense pricing competition.

Stephen Entwistle, Vice President of the Strategic Technologies Practice at Strategy Analytics noted, "Following the telecom industry meltdown a couple of years back, Capex budgets were slashed, and price became the primary competitive weapon for the numerous fiber optic device companies."

"The market for fiber optic devices is there and it is growing," adds Asif Anwar, Director, Strategy Analytics' GaAs and Compound Semiconductor Technologies service, "However, the IC industry is in a structurally poor state. For profitability to return, what is needed is not only growing demand, but some consolidation and stability among IC suppliers."

This report provides a comprehensive view of markets for Si, SiGe, GaAs and InP fiber optic ICs and also includes IC, module and systems vendor profiles.