Worldwide spending on network transport equipment declined 5% in the second quarter of 2021, according to the most recent Transport Hardware Report from research firm Cignal AI. North American results were weak YoY due to cyclical Covid influences in 2020. Still, NA operators are set to grow spending aggressively in the second half of the year. Chinese network operator spending collapsed over 20% in 2Q21 as 5G capex paused and supply chain challenges worsened.
“Despite current semiconductor supply chain issues, North American spending should accelerate in the second half of 2021 as operators purchase additional high-performance long-haul WDM coherent equipment,” said Kyle Hollasch, Lead Analyst for Transport Hardware at Cignal AI. “Long Haul line systems capable of supporting wider and variable channel spacing, higher degree counts, and improved add/drop capabilities provide compelling reasons to make investments now.”
Additional 2Q21 Transport Hardware Report Findings:
- The spending mix between long-haul and metro WDM reached a record level following 5 quarters of investment in advanced coherent and line system technology. Carriers may be deferring metro expenditures considering the imminent availability of transport system upgrades utilizing 400G coherent pluggables.
- Chinese optical and packet hardware spending collapsed, resulting in the largest single quarterly decline on record and the first instance of consecutive quarters with YoY declines.
- Sales of optical hardware in EMEA were up significantly YoY as the region continues to produce steady single-digit growth. Despite strategic wins by Nokia and observations of increasing replacement activity from Ciena, Huawei’s footprint in EMEA shows no noticeable impact from geopolitical factors.
- North American packet transport sales were up slightly, with market leader Cisco realizing gains in Core as its 8000 series routers ramp.
- Component shortages weighed on smaller equipment manufacturers as constrained global semiconductor production increased lead times. ADVA and Infinera quantified the effect on sales (10% and 6% of revenue, respectively), though larger vendors reported minimal impact on their sales. Vendors do not anticipate resolution of these issues until 2022.
https://cignal.ai/2021/09/north-american-optical-transport-spending-to-accelerate/