Optical and packet transport spending falls in EMEA, Asia – report

Created August 30, 2022
News and Business

Spending on optical transport hardware by North American network operators grew more than 20% in 2Q22 compared with the year before according to the most recent Transport Hardware Report from research firm Cignal AI. Equipment capex by traditional network operators as well as large cloud operators has now surpassed pre-Covid levels, however spending by European and Asian operators remains low by comparison, the report found.

Bookings remain exceptionally strong, with large vendors universally reporting orders exceeding revenue resulting in record backlogs. Equipment vendors indicate that supply chain difficulties affected their ability to ship products and delayed network deployment and acceptance, postponing recognition of some revenue.

“Funding for broadband infrastructure, continuing 5G rollouts, and pent-up demand because of supply chain disruptions have catalysed growth in North American transport spending,” said Kyle Hollasch, lead analyst for Transport Hardware at Cignal AI. “Massive order backlogs and an anticipated easing of supply issues point to a period of rapid spending growth for service providers and cloud operators in the region.”

The report also notes that second quarter 2022 worldwide optical hardware spending grew 3%. Revenue grew in North America and China while all other regions declined, while worldwide cloud and colo spending grew over 10%, compared to roughly flat spending by traditional service providers. Enterprise and Government sales declined year-on-year for the fifth consecutive quarter as the heightened spending levels during the pandemic reverted to normal.

Cisco, Infinera, and ADVA benefited the most from an increase in spending by cloud operators in North America, but results varied widely by region; North American optical revenue grew to the highest second-quarter level on record, while European spending declined. EMEA’s decline, says Cignal.AI, is due to a shift from transport to RAN spending, combined with a disadvantageous dollar exchange rate. Worldwide packet transport sales grew 6%, driven by cloud and colo packet spending, which grew 16%, meanwhile the North American packet transport sales climbed in tandem with optical and grew over 30%, with Cisco, Nokia, and Juniper all participating, but EMEA packet sales fell.

For more information, visit https://cignal.ai

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This article was written
by Peter Dykes

Peter Dykes is a independent telecoms and technology journalist who has over that last 30 years written for a wide range of B2B publications and companies. A former BT engineer, he specialises in networks and associated support systems. He is currently Editor of Optical Connections.