Network Operators Absorb Inventory and Pause Orders
BOSTON (August 21, 2023) – Worldwide spending on optical transport hardware declined by 2% YoY during 2Q23, according to the most recent preliminary Transport Hardware Report from research firm Cignal AI. Supply chains have recovered, but macroeconomic concerns are causing some network operators to delay projects and postpone delivery of ordered hardware by several quarters. Sales of Routing equipment remain mixed, with Enterprise and Hyperscale network operators continuing to build, and 5G applications subject to strong pullbacks.
“The optical market is clearly showing signs of weakness, India is the only bright spot.” said Kyle Hollasch, Lead Analyst for Transport Hardware at Cignal AI. “Large network operators are absorbing inventory accumulated during the supply chain uncertainties of 2022, and hyperscalers are reverting to just-in-time ordering as lead times come down.”
Additional 2Q23 Transport Hardware Report Findings:
- Optical sales to Service Providers and Cloud & Colo operators fell -2% and -3%, respectively.
- The worldwide routing market grew 16% during its seventh straight quarter of growth. This growth came despite sharp spending pullbacks in western 5G networks.
- North American 2Q23 optical revenue flattened following 18 months of rapid growth. Ciena and Infinera grew revenue, lifted by strong sales to hyperscalers and shipments against their large backlogs.
- EMEA’s optical sales were flat, but routing sales leaped 27% led by Huawei and Nokia. Huawei’s optical revenue declined for the fourth straight quarter, while Nokia’s has grown for the last three.
- RoAPAC spending surged on as Indian operators continued to build, with Nokia and Ciena benefitting most.
Live Presentation Available
Results from Cignal AI’s Transport Hardware Report are presented live each quarter by Lead Analyst Kyle Hollasch. Clients are welcome to register for a presentation on September 19th at 11 AM ET.
About the Transport Hardware Report
Cignal AI’s Transport Hardware & Markets Report is issued each quarter and examines optical and packet transport equipment revenue across all regions, customers, 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 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. It also tracks equipment spending by end-customer market type, including traditional service provider, cloud/hyperscale, and enterprise/government network operators. Vendors in the report include Adtran, Alaxala, Ciena, Cisco, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Juniper, Mitsubishi Electric, NEC, Nokia, Padtec, Ribbon, Smartoptics, Tejas, Xtera, ZTE as well as other vendors. A full report description, as well as articles and presentations, is 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.Contact Us/Purchase Report