The worldwide Service Provider (SP) Router and Switch market saw extraordinarily strong growth in the 1Q 2023 fueled by hyperscalers and an unleashed component supply that allowed equipment vendors to fulfill orders and catch up on backlogs, according to a newly released report from Dell’Oro Group.
“We were caught by surprise as revenues blew through the roof, growing 15 percent year-over-year. Only three times in the past twelve years has the SP Router market increased at this rate. For over two years, component supplies have constrained vendors’ ability to fulfill orders, and orders were piling to record levels,” said Ivaylo Peev, Senior Analyst at Dell’Oro Group. “For the short-term outlook, we may see another quarter of strong growth, but do not expect it to be sustainable as customers need time to digest inventory, and the bulk of the market deployments come from Telecom SPs which refresh their networks at a steady pace.
“We have seen particular strength recently from Hyperscalers in North America which deploy routers to interconnect geographically dispersed facilities, to connect to Telecom SP wide area networks, and to connect inside the data centers. Within the data center, we are seeing a significant increase towards high-speed network connectivity such as 200 Gbps and 400 Gbps Ethernet switch deployments, which in turn have a cascading effect on the network core. Top router manufacturers benefited from this trend, of notable mention Cisco gained two-share points during the quarter, climbing to its highest level since 1Q 2019,” continued Peev.
Additional highlights from the 1Q 2023 Service Provider Router and Switch Report:
- In 1Q 2023, we saw double-digit market growth across all regions except EMEA, which declined. North America led the market with sizable growth, followed by the CALA (Caribbean and Latin America) and APAC.
- Starting 1Q 2023, we separately report 400 Gbps port shipments. The demand for routers supporting 400 Gbps connectivity continued to grow among both Cloud and Telco SPs, and Hyperscale’s demand was particularly strong in this quarter. We estimate 400 Gbps ports compose approximately 5 percent of total port shipments in 2023.
- Within the Edge Router segment, Juniper, Ciena, and ZTE gained share.
