Improved component supply fuels 2023 router and switch market growth – report

Created August 11, 2023
News and Business

According to the Service Provider Router and Switch 5-Year July 2023 Forecast recently published by Dell’Oro Group, the cumulative revenues spent on Service Provider (SP) Router and Switch equipment are projected to approach US$77 billion over the next five years. This represents a 9% increase compared to the cumulative revenue of the previous five-year period, propelled largely by a combination of applications driving higher volumes of traffic such as proliferation of 5G on mobile networks, residential broadband shifting to higher speed cable, and PON, and increased use of video.

Dell’Oro says it expects the combined SP Edge Router and Aggregation Switch segment’s growth to be propelled by SPs’ expansion of mobile backhaul networks followed by broadband expansion. Broadband SP investment in fibre will result in significant traffic increases, and broadband providers will continue upgrading Edge Routers to support faster speeds and lower latency.

Disaggregated Router sales are also gaining share, and it anticipates this trend will continue throughout the forecast horizon. Existing Telecom SP projects are progressing, and new use cases are moving from testing to production. Growth is driven by ongoing deployments in the maturing AT&T project as well as by new deployments by Turkcell, the leading mobile operator of Turkey, and KDDI Corporation, a Tier One Japanese telecom operator.

“Although we’ve seen strong market growth in 2023, double the normal growth rate, we expect it to be short term. Vendors have been building backlog for two years and the recent strong growth is a result of improved component supply which enabled vendors to release large quantities of product into the market,” stated Ivaylo Peev, senior analyst at Dell’Oro Group. “We saw particularly strong sales to hyperscalers in North America at the beginning of 2023. Large Cloud SPs deploy routers to interconnect geographically dispersed facilities, connect to Telecom SP wide area networks, and connect inside the data centres. However, we believe that the surge in sales to Cloud SPs has passed its peak and will slow over the forecast period. Cloud SPs have heavily invested in 400 Gbps infrastructure in the last few years and are well prepared for AI workloads,” added Peev.

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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.