I. Supply Side

1. Excess Capacity and Uneven Quality

• There are too many manufacturers, resulting in excess capacity. Product quality varies greatly, and the industry is mired in a price war, which severely damages its reputation.

2. Insufficient R&D Investment

• There is a lack of R&D investment in low-speed products below 100G. The quality of these products has stagnated and cannot meet market demands.

3. Neglected Testing

• Compatibility Testing: 90% of manufacturers skip this step, leading to a 20% rate of after-sales issues.
• Aging Testing: Reduced from the standard 72 hours to just 8 hours, this change has caused a sharp increase in failure rates after three years.

II. Customer Side

1. Limited and Risky Purchasing Channels

• Small and medium-sized telecom companies, ISPs, IT end-users, and small-scale distributors mainly purchase through local distributors and e-commerce platforms.
• Local Distributors: Prices are relatively high. But as mentioned above, the supplier side’s price has been low enough. Where does the money go?
• E-commerce Platforms: It is difficult to identify the quality of products. Recent years, many optical module independent websites spend a large amount of advertising money on Google rankings. If a 1G module is sold for only $6, it is hard to cover the company’s operating costs and the hundreds of thousands of dollars in marketing expenses per week. This forces them to choose suppliers with cheaper products.

2. Direct Sales Model and Cost Conflict

• Some e-commerce platforms, such as FS, offer good product quality. However, their direct sales model and strict control over discounts make it difficult for end-users to reduce project costs.