The Optical Transport equipment market ended 2024 on a strong note, growing approximately 45 percent quarter-over-quarter in 4Q 2024, according to a new report from Dell’Oro Group. The market, however, declined by 13 percent in the full year 2024 due to customers adjusting for excess inventory and broadly unfavorable macroeconomic conditions.
“There is light at the end of this tunnel,” said Jimmy Yu, Vice President at Dell’Oro Group. “The Optical Transport equipment market entered a period of revenue contraction in late 2023 and looks to be exiting it in early 2025. The strong fourth quarter growth rate in 2024 is a great indication that supply and demand for Optical Transport equipment is near equilibrium, meaning the equipment glut is over,” added Yu.
Additional highlights from the 4Q 2024 Optical Transport Quarterly Report:
- 4Q 2024 had one of the best quarter-over-quarter growth rates seen in a fourth quarter. The sharp growth occurred not only in China, where there is strong seasonality but across almost all regions, including North America, which posted its third quarter of consecutive revenue increase. The Optical Transport market outside of China grew approximately 35 percent sequentially in 4Q 2024.
- The customer inventory correction that started in 4Q 2023 is behind us. Vendor comments indicate that order flow is increasing, and optical revenue in the North American region, where most of the excess inventory build-up occurred, is improving.
- The top five vendors in 2024 were Huawei, Ciena, Nokia, ZTE, and Infinera. Huawei held the highest market share at 33 percent, followed by Ciena at 19 percent. Nokia’s acquisition of Infinera has not closed, however, if they were combined, the joint market share would be 19 percent as well.
- Three vendors gained market share in 2024. Huawei gained three percentage points, ZTE gained one percentage point, and Cisco gained one percentage point. These vendors gained market share in most of the regions they supply.