Cignal AI: COVID-19 Continued to Pressure Optical Network Supply Chain in Q2-2020
Delayed order fulfillment due to COVID supply chain impact earlier this year was expected to spur sales growth in 2Q20, but instead the results were mixed, according to the most recent Transport Hardware Report from research firm Cignal AI. Forecasted growth in Q2 from sales pushed out from Q1 did not materialize, and network operators indicated that annual CapEx would not increase (see chart below). As a result, spending on optical and switching/routing equipment will be flat to down in the second half of the year.
“COVID operational issues slowed deliveries and revenue recognition in the second quarter, although optical hardware sales increased in NA and EMEA due to high demand for inventory,” stated Cignal AI Lead Analyst Scott Wilkinson. “Growth is not expected to continue in the second half as carriers have pulled forward annual CapEx spending and networks are now able to cope with COVID-related surges.”
Some regions did shine in 2Q20. North American optical sales were up sharply YoY in both metro and long haul WDM, though the second half of the year is expected to be flat or down. Japan’s extraordinary growth in optical sales expanded to packet sales this quarter, with sales to both market segments up substantially YoY.
Additional 2Q20 Transport Hardware Report Findings:
- In addition to COVID woes, RoAPAC continues to suffer from the CapEx limitations in India, and optical sales declined -20% for the quarter while packet sales also declined.
- China has overcome its COVID related issues and returned to optical and packet spending growth this quarter, with increasing growth forecasted for Q3.
- EMEA optical spending increased YoY but was weighed down by weak Nokia sales. Nokia predicts that Q3 sales increases will offset Q2 declines.
Real-Time Market Data:
Cignal AI’s Transport Hardware Dashboardis available to clients of the Transport Hardware Report and provides up-to-date market data, including individual vendors’ results as they are released. Users can manipulate variables online and see information in a variety of useful ways, as well as download Excel files with up-to-date snapshots of market reporting.
Contact: [email protected]@cignal.ai
According to Industry Research, the global Optical Transport Network (OTN) Equipment (optical transport and switching) market is projected to reach USD 20360 million by 2026, from USD 15810 million in 2020, at a CAGR of 4.3% during 2021-2026.
The Optical Transport Network (OTN) Equipment market is segmented into the following categories:
- Mobile Backhaul Solutions
- Triple Play Solutions
- Business Services Solution
- Industry and Public Sector
With respect to data rates, the Optical Transport Network (OTN) Equipment market is segmented into three categories:
- < 10G