Dell’Oro analysts say first half global telecom equipment [1.] revenues were up 4% YoY in 1st half of 2020, as 5G infrastructure investments offset declines due to the impact of the coronavirus pandemic.  The market research firm forecasts a 5% advance for the entire year.

Rollouts of 5G wireless, especially in China, were a primary cause of the first half increases, which benefit the entire supply chain, including telecommunications semiconductors.  China 5G spending surely helped Huawei increase its market share, despite U.S. sanctions.

Note 1. Dell’Oro includes the following types in the telecom equipment market: Broadband Access, Microwave & Optical Transport, Mobile Core & Radio Access Network, SP Router & Carrier Ethernet Switch

In the first half of 2020, double digit growth in mobile infrastructure offset declining investments in broadband access, microwave and optical transport and service provider routers and ethernet switches, Dell’Oro said. Statista analysts in June said 2020 telecom equipment revenues should nearly reach $50 billion.

Rankings of the biggest telecom equipment providers  remained the same in the first half of 2020, with Huawei dominating at 31%, followed by Nokia and Ericsson tied at 14% each, then ZTE at 11% and Cisco at 6%, according to Dell’Oro.

Second quarter results were stronger than expected following a 4% decline in the first quarter. The biggest driver was a strong rebound in China across 5G Radio Access Network, 5G Core and other areas. Supply chain disruptions of the first quarter also stabilized in the second quarter, Dell’Oro said.

Additional key takeaways from the 2Q20 reporting period include:

• Following the 4% Y/Y decline during 1Q20, the overall telecom equipment market returned to growth in the second quarter, with particularly strong growth in mobile infrastructure and slower but positive growth for Optical Transport and SP Routers & CES, which was more than enough to offset weaker demand for Broadband Access and Microwave Transport.
• For the 1H20 period, double-digit growth in mobile infrastructure offset declining investments in Broadband Access, Microwave and Optical Transport, and SP Routers & CES.
• The results in the quarter were stronger than expected, driven by a strong rebound in China across multiple technology segments including 5G RAN, 5G Core, GPON, SP Router & CES, and Optical Transport.
• Also helping to explain the output acceleration in the quarter was the stabilization of various supply chain disruptions that impacted the results for some of the technology segments in the first quarter.
• Shifting usage patterns both in terms of location and time and surging Internet traffic due COVID-19 has resulted in some infrastructure capacity upside, albeit still not proportional to the overall traffic surge, reflecting operators ability to address traffic increases and dimension the network for additional peak hours throughout the day using a variety of tools.
• Even though the pandemic is still inflicting high human and economic losses, the Dell’Oro analyst team believes the more upbeat trends in the second quarter will extend to the second half, propelling the overall telecom equipment market to advance 5% in 2020.

Semiconductor officials are less optimistic for the rest of the year with SIA President John Neuffer recent saying “substantial market uncertainty remains for the rest of the year.”   Semiconductor sales were up 5% in July, reaching $35 billion, but dropped in early August, according to reports.

According to the Semiconductor Industry Association, about 33% of all semiconductors made (the largest category) are devoted to communications, including networking equipment and radios in smartphones.

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References:

Key Takeaways – The Telecom Equipment Market 1H20

https://www.fierceelectronics.com/electronics/telecom-equipment-revenues-to-grow-5-through-2020