Cignal AI has updated the optical and packet transport hardware 2020 forecast with our best estimates of the impact of COVID-19. The overall annual reduction is less than 5% in all regions and varies by end-customer market. Capex will be front-loaded into the first two quarters of 2020 and we expect some customer markets (e.g., Enterprise and Government) will have significant reductions in optical and packet capex for the year.
These changes are incorporated in the 1Q20 forecasts for all three reports (Hardware, Customer Markets, Applications) and are available for viewing or download in the real-time dashboards.
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Over the last three weeks, Cignal AI spoke with equipment vendors, network operators, and installers/VARs to quantify the impact of COVID-19 on their businesses. In general, all respondents were positive about revenue and capex trends in the first half of 2020, with vendors experiencing a sharp increase in both shipments and orders because of increased traffic and supply chain uncertainty. The second half of 2020 is much more difficult to forecast. The impact of an expected worldwide recession will cause a reduction in network revenue for most operators that will affect capital spending.
Significant drivers for the 2020 forecast update include:
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