Under COVID, Operators Exhaust Capex Earlier in Year

BOSTON (March 1, 2021) – North American network operator purchases of optical and packet transport hardware dropped sharply in the fourth quarter, according to the most recent Transport Hardware Report from research firm Cignal AI. Tier 1 operators prioritized spending earlier in the year amid concerns of COVID-related supply disruptions and are now focused on using and deploying that purchased capacity. European spending trends improved in Q4 but were also down on an exchange rate adjusted basis.

“Despite the massive disruptions during 2020, overall spending declined only slightly in 2020,” said Scott Wilkinson, Transport Hardware lead analyst at Cignal AI. “But this quarter, almost all vendors felt the impact of capex pulled forward in the year due to operators scrambling to secure safety stock.”

Additional 4Q20 Transport Hardware Report Findings:

  • For the entire year of 2020, NA optical transport hardware spending was down slightly vs. 2019, with Ciena and Infinera reporting flat YoY sales and Cisco, Nokia, and Fujitsu reporting declines.
  • Optical sales growth in EMEA was steady for the quarter and for the year, while sales in China were flat. Huawei continued to lead market share in both regions despite political pressure and new design wins by competitors.
  • The pattern of NA packet switching and routing sales closely mirrored that of optical sales, producing a decline of almost -20% this quarter. Nokia sales grew for the quarter and the year, while Cisco’s market share declined. Nokia gained share in the region, and Ribbon led YoY growth as it secured a significant win in the region to boost sales by more than 10x.

Real-Time Market Data

Cignal AI’s Transport Hardware Dashboard is available to subscription clients of the Transport Hardware Report. The Dashboard provides real-time market data with vendors’ results as they are released. Users are able to manipulate variables online to view information in a variety of useful ways, as well as download Excel files with current snapshots of market reporting.

1Q20-Dashboard-Sample

About the Transport Hardware Report

Cignal AI’s Transport Hardware Report is issued each quarter and examines optical and packet transport equipment revenue across all regions and equipment types. The initial analysis is based on financial results, independent research, and guidance from individual equipment companies. Hardware forecasts are reviewed and updated in the following weeks, along with spending trends by operator type.

The Transport Hardware Report examines revenue for metro WDM, long-haul WDM and submarine (SLTE) optical equipment, and access, aggregation, edge, and core packet equipment in six global regions. Vendors in the report include Adtran, ADVA, Alaxala, Ciena, Cisco, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Juniper, Mitsubishi Electric, NEC, Nokia, Padtec, Ribbon, Tejas, Xtera, and ZTE. A full report description, as well as articles and presentations, are available on the Cignal AI website.

About Cignal AI

Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.

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