Optical and routing hardware spending drops 15% in 1Q24 – report

Created June 3, 2024
News and Business

There was no relief in 1Q24 for Optical and Routing Transport equipment, according to the 1Q24 Transport Hardware Report from research firm Cignal AI. While spending by cloud operators continued to grow, it was more than offset by the ongoing decline in purchasing among traditional service providers.

“Cloud Operators continue to provide the fiscal and technical leadership in the transport equipment market”, said Kyle Hollasch, Lead Analyst at Cignal AI. “Based on our discussions within the supply chain, we don’t expect a recovery in spending from traditional service providers until 2025, at the earliest.”

  • Spending in North America on Optical Transport equipment declined for the 4th straight quarter, while Routing dropped to levels last seen in 2020.
  • Cloud Operator expenditures hit double digits while traditional service providers continued to cut back. Sales to Cloud and Colo operators exceeded Service Provider spending for the second consecutive quarter. Ciena remains the primary beneficiary of Cloud spending.
  • Network operators in EMEA spent cautiously, apart from buildouts for cloud operators, which grew almost 50%.
  • Chinese operators are upgrading long-haul WDM infrastructure, and the latest contract awards benefitted Huawei, ZTE, and Fibrehome. Routing equipment in the region remains flat.
  • Now that Indian operators have completed a series of 5G related builds, spending in RoAPAC (ex-China and Japan) is in a downturn.

The report examines revenue for metro WDM, long-haul WDM and submarine (SLTE) optical equipment, and access, aggregation, edge, and core routing equipment in six global regions. It also tracks equipment spending by end-customer market type, including traditional service provider, cloud/hyperscale, and enterprise/government network operators. Key market segments such as Compact Modular and Packet-OTN equipment as well as shipments of ROADMs are also included. Vendors in the report include Adtran, Alaxala, Ciena, Cisco, Ekinops, Fibrehome, Fujitsu, Huawei, Infinera, Juniper, Mitsubishi Electric, NEC, Nokia, Packetlight, Padtec, Ribbon, Smartoptics, Tejas, Xtera, ZTE as well as other vendors.

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.