Spending rebounds for worldwide optical and packet transport

Worldwide spending on network transport equipment increased 4% in the first quarter of 2021, according to the most recent Transport Hardware Report from research firm Cignal AI. Strong gains in switching and routing spending were offset by the slightly weaker deployment of optical transport equipment. Spending by Chinese network operators slowed across all product categories after 2020’s strong growth, while the rest of the world rebounded this quarter.

“Chinese spending on optical transport hardware has plateaued as major 5G network builds mature and new projects have not been initiated,” said Scott Wilkinson, Lead Analyst for Transport Hardware at Cignal AI. “China’s extraordinary growth during 2015 to 2018 could not continue long term due to the impracticality of expanding upon the enormous amounts that had already been spent in the region.”

Additional 1Q21 transport hardware report findings:

• First-quarter 2021 worldwide optical hardware spending was slightly negative YoY, as China and NA declines dragged the average down. All other regions reported growth YOY.
• Worldwide packet transport sales grew in the first quarter. Edge, Core, and Aggregation all grew by more than 10% YoY when compared against an especially weak 1Q20.
• Japan’s extraordinary run of packet transport spending growth continued into Q1; up nearly +40% YoY. Much of the growth belongs to established carriers (as opposed to newcomers like Rakuten). Cisco continues to lead sales in the region, and the company more than doubled its packet transport sales YoY.
• Optical hardware sales in China declined nearly -10%, despite being compared to a weak 1Q20. The current quarter’s decline was unexpected since China has resolved COVID issues and was expanding rapidly for 5G, OTT, and regional interconnections.
• EMEA’s Q1 optical hardware sales were very strong; up more than 20% YoY. Despite reports of Huawei losing new deals in the region (e.g. Swisscom and DT), the company’s market share leadership remained steady.

Cignal AI