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Long Term Chinese Capex Growth Trend Slows

BOSTON (June 2, 2021) – Worldwide spending on network transport equipment increased 4% in the first quarter of 2021, according to the most recent Transport Hardware Report from research firm Cignal AI. Strong gains in switching and routing spending were offset by the slightly weaker deployment of optical transport equipment. Spending by Chinese network operators slowed across all product categories after 2020’s strong growth, while the rest of the world rebounded this quarter.

“Chinese spending on optical transport hardware has plateaued as major 5G network builds mature and new projects have not been initiated,” said Scott Wilkinson, Lead Analyst for Transport Hardware at Cignal AI. “China’s extraordinary growth during 2015 to 2018 could not continue long term due to the impracticality of expanding upon the enormous amounts that had already been spent in the region.”

Additional 1Q21 Transport Hardware Report Findings:

  • First-quarter 2021 worldwide optical hardware spending was slightly negative YoY, as China and NA declines dragged the average down. All other regions reported growth YOY.
  • Worldwide packet transport sales grew in the first quarter. Edge, Core, and Aggregation all grew by more than 10% YoY when compared against an especially weak 1Q20.
  • Japan’s extraordinary run of packet transport spending growth continued into Q1; up nearly +40% YoY. Much of the growth belongs to established carriers (as opposed to newcomers like Rakuten). Cisco continues to lead sales in the region, and the company more than doubled its packet transport sales YoY.
  • Optical hardware sales in China declined nearly -10%, despite being compared to a weak 1Q20. The current quarter’s decline was unexpected since China has resolved COVID issues and was expanding rapidly for 5G, OTT, and regional interconnections.
  • EMEA’s Q1 optical hardware sales were very strong; up more than 20% YoY. Despite reports of Huawei losing new deals in the region (e.g. Swisscom and DT), the company’s market share leadership remained steady.

Upcoming Live Presentation

Results from Cignal AI’s Transport Hardware Report are presented live each quarter by Lead Analyst Scott Wilkinson. Clients are welcome to register to attend the next presentation on June 3rd @ 11 AM ET, or can simply register to be notified when a replay is available and PowerPoint slides can be downloaded.

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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