Telecom Equipment Market
Dell’ Oro: Huawei still top telecom equipment supplier; optical transport market +1% in 2020
Huawei has increased its lead as the#1 global telecoms network equipment vendor, boosting its revenue share by a three percentage points last year, according to Dell’Oro Group. Nokia lost one percentage point of revenue share year-on-year, as did Cisco, the latter falling to 6%. Ericsson gained one percentage point to match Nokia at 15% of the market and ZTE also saw a 1% uptick to 10% of the global telecom market. (Please refer to chart below).
Dell’Oro Group’s preliminary estimates suggest the overall telecom equipment market – Broadband Access, Microwave & Optical Transport, Mobile Core & Radio Access Network, SP Router & Carrier Ethernet Switch (CES) – advanced 7% year-over-year (Y/Y) for the full year 2020, growing at the fastest pace since 2011.
The telecom and networking market research firm suggests revenue rankings remained stable between 2019 and 2020, with Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung ranked as the top seven suppliers, accounting for 80% to 85% of the total market. At the same time, revenue shares continued to be impacted by the state of the 5G rollouts in highly concentrated markets. While both Ericsson and Nokia improved their RAN positions outside of China, initial estimates suggest Huawei’s global telecom equipment market share, including China, improved by two to three percentage points for the full year 2020.
Dell’Oro now estimates the following revenue shares for the top seven suppliers:
| Top 7 Suppliers | Year 2019 | Year 2020 |
| Huawei | 28% | 31% |
| Nokia | 16% | 15% |
| Ericsson | 14% | 15% |
| ZTE | 9% | 10% |
| Cisco | 7% | 6% |
| Ciena | 3% | 3% |
| Samsung | 3% | 2% |
Additional key takeaways from the 4Q2020 reporting period:
- Preliminary estimates suggest that the positive momentum that has characterized the overall telecom market since 1Q-2020 extended into the fourth quarter, underpinned by strong growth in multiple wireless segments, including RAN and Mobile Core Networks, and modest growth in Broadband Access and CES.
- Helping to drive this output acceleration for the full year 2020 is faster growth in Mobile Core Networks and RAN, both of which increased above expectations.
- Covid-19 related supply chain disruptions that impacted some of the telco segments in the early part of the year had for the most part been alleviated towards the end of the year.
- Not surprisingly, network traffic surges resulting from shifting usage patterns impacted the telecom equipment market differently, resulting in strong demand for capacity upgrades with some technologies/regions while the pandemic did not lead to significant incremental capacity in other cases.
- With investments in China outpacing the overall market, we estimate Huawei and ZTE collectively gained around 3 to 4 percentage points of revenue share between 2019 and 2020, together comprising more than 40% of the global telecom equipment market.
- Even with the higher baseline, the Dell’Oro analyst team remains optimistic about 2021 and projects the overall telecom equipment market to advance 3% to 5%.
Dell’Oro Group telecommunication infrastructure research programs consist of the following: Broadband Access, Microwave Transmission & Mobile Backhaul, Mobile Core Networks, Mobile Radio Access Network, Optical Transport, and Service Provider (SP) Router & Carrier Ethernet Switch.
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Last week, Dell’Oro Group reported that the optical transport equipment revenue increased 1% in 2020 reaching $16 billion. In this period, all regions grew with the exception of North America and Latin America.
“Between concerns on starting new optical builds during the start of the pandemic and aggressive plans on 5G deployments that required a larger share of a service provider’s capital budget, the spending on optical transport dramatically slowed by the end of 2020,” said Jimmy Yu, Vice President at Dell’Oro Group.
“It was a really dramatic drop in optical equipment purchases in the fourth quarter. While we anticipated a slowdown near the end of the year due to concerns around COVID-19, we were surprised by a 29 percent year-over-year decline in WDM purchases in North America as well as a 12 percent decline in China. That said, there was good growth in the other parts of the world, especially Japan,” continued Yu.
| Optical Transport Equipment Market | |
| Regions | Growth Rate in 2020 |
| North America | -6% |
| Europe, Middle East and Africa | 2% |
| China | 1% |
| Asia Pacific excluding China | 13% |
| Caribbean and Latin America | -14% |
| Worldwide | 1% |
The Dell’Oro Group Optical Transport Quarterly Report offers complete, in-depth coverage of the market with tables covering manufacturers’ revenue, average selling prices, unit shipments (by speed including 100 Gbps, 200 Gbps, 400 Gbps, and 800 Gbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), optical switch, optical packet platforms, data center interconnect (metro and long haul), and disaggregated WDM. To purchase this report, please email [email protected].
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Dell’Oro: Telecommunication Equipment Market 1Q20 to 3Q20 +China’s New 5G Base Stations
Preliminary estimates by the Dell’Oro Group suggest the overall telecom equipment market advanced 9% Year-Over-Year (Y/Y) during 3Q20 and 5% Y/Y for the 1Q20-3Q20 period. That market includes: Broadband Access, Microwave & Optical Transport, Mobile Core & Radio Access Network, SP Router & Carrier Ethernet Switch (CES).
The analysis contained in these reports suggests revenue rankings remained stable between 2019 and 1Q20-3Q20, with Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung ranked as the top seven suppliers, accounting for more than 80% of the total market. At the same time, revenue shares continued to be impacted by the state of the 5G rollouts in highly concentrated markets.
Huawei and ZTE are both on course to gain two percentage points of market share each this year, at the expense of Nokia, Cisco and Samsung. With investments in China outpacing the overall market, we estimate Huawei and ZTE collectively gained about 3 percentage points of revenue share,” wrote Dell’Oro Analyst Stefan Pongratz in his blog on the matter, implying they actually grabbed around 1.5 percentage points each.
Dell’ Oro estimates the following revenue shares for 2019 and the 1Q20-3Q20 period for the top seven suppliers:
- Following the 4% Y/Y decline during 1Q20, the positive trends that characterized the second quarter extended into the third quarter, underpinned by strong growth in Optical Transport and multiple wireless segments including 5G RAN, 5G Core, and Microwave Mobile Backhaul. Technology segments that were impacted more materially by COVID-19 and the lockdowns during 1Q20 continued to stabilize in the quarter.
- Preliminary estimates indicate increasing Mobile Infrastructure and Optical Transport revenues offset declining investments in Microwave Transport and SP Routers & CES for the 1Q20-3Q20 period.
- The overall telecom equipment market continued to appear disconnected from the underlying economy. While the on-going transition from 4G to 5G is helping to offset reduced capex in slower-to-adopt mobile broadband markets, we also attribute the disconnect to the growing importance of connectivity and the nature of this recession being different than in other downturns improving the visibility for the operators.
- With investments in China outpacing the overall market, we estimate Huawei and ZTE collectively gained about 3 percentage points of revenue share between 2019 and 1Q20-3Q20, together comprising more than 40% of the global telecom equipment market.
- The Dell’Oro analyst team has not made any material changes to the overall outlook and projects the total telecom equipment market to advance 5% to 6% in 2020 and 3% to 4% in 2021. Total telecom equipment revenues are projected to approach $90 B to $95 B in 2021.
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Judging from a report by China Daily “China to build 1 million new 5G stations in 2021.” it appears Huawei and ZTE will continue to increase their telecom equipment market share. Reporter Ma Si of China Daily spoke to Wu Hequan, an academician at the Chinese Academy of Engineering, who reckons China will build over a billion 5G base stations next year, taking the grand total to 1.7 million by the end of the year.
China workers working at the construction site of a 5G base station at Chongqing Hi-tech Zone in Chongqing, Southwest China. [Photo/Xinhua]
“As the construction of 5G networks accelerates, the cost of building each 5G base station will go down,” said Wu. “Even if Chinese telecom carriers earmark the same amount of 5G investments in 2022 as they have done this year, they can build far more 5G base stations next year than this year. I believe Chinese telecom carriers will build more than one million 5G base stations next year, though the specific construction targets will have to wait for the telecom carriers’ official announcements.”
China Mobile, China Telecom and China Unicom did not immediately respond to requests for comment from China Daily.
Wu’s remarks are in line with China’s top industry regulators’ predictions the nation will “moderately” push ahead 5G construction in the next few years. The Ministry of Industry and Information Technology said in October as the country is set to enter a lead-in period in the next three years, China will continue to build 5G networks in a rhythm that is moderately ahead of schedule, so the wider coverage of 5G can help promote its use in more industrial and consumer scenarios.
That lead-in period, according to some industry insiders, means new products, new formats and new models of 5G application are constantly emerging and such applications are shifting from single application to large-scale and systemic scenarios.
China seems to be all the more determined to ensure its domestic telecoms industry goes from strength to strength. In response to the threat to the U.S. from China, John Ratcliffe wrote in the Wall Street Journal (on-line subscription required for access): “Beijing is preparing for an open-ended period of confrontation with the U.S. Washington should also be prepared. Leaders must work across partisan divides to understand the threat, speak about it openly, and take action to address it.”
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Key Takeaways—Telecommunication Equipment Market 1Q20 to 3Q20
Chinese telecoms kit vendors gained global market share this year
https://www.chinadaily.com.cn/a/202012/02/WS5fc74e99a31024ad0ba99633.html
Dell’Oro: Telecom equipment revenues to grow 5% through 2020; Huawei increases market share
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:
https://www.fierceelectronics.com/electronics/telecom-equipment-revenues-to-grow-5-through-2020
Tech Mahindra: “We can build and run an entire 4G and 5G or any enterprise network”
India based IT services provider Tech Mahindra says it has the capability to build and run an entire 4G or 5G network in India. The company’s partnership with Japanese greenfield telco Rakuten Mobile [1.] will help it get more meaningful business in India’s telecom industry, a senior executive said.
Note 1. Rakuten Mobile, together with NEC, is building a 5G Open RAN and cloud native 5G core network based on their own specifications. Open RAN and cloud native 5G core network are two different and independent initiatives.
“We can build and run an entire 4G and 5G or any enterprise network. We have done that already. We bring to the table our ability to design, to plan, to integrate and deploy and then to manage the entire suite of network capabilities, including designing various parts to it in a disaggregated world,” Manish Vyas – President, Communications, Media & Entertainment Business, and the CEO, Network Services, Tech Mahindra, told the Economics Times of India.
In August, the company announced German telecoms company Telefonica Deutschland had selected it for its network and services operations, in addition to further developing 5G, artificial intelligence, and machine learning use cases.
“We are pleased to announce this partnership with Tech Mahindra. We are supported by a globally experienced service provider to consistently drive forward the development of our network and services operations, thus leading to further enhancement of 5G, artificial intelligence and data analysis use cases,” said Mallik Rao, Chief Technology & Information Officer of Telefonica Deutschland.
“This strategic partnership strengthens our long-standing relationship with Telefonica, in which we support the company in realizing its vision of becoming the ‘Mobile Customer and Digital Champion’ by 2022,” said Vikram Nair, President, Europe, Middle East and Africa (EMEA) of Tech Mahindra.
In October 2019, the company launched a 5G enabled Factory of the Future solution. Nilesh Auti, Global Head Manufacturing Industry unit, Tech Mahindra, said:
“Factory equipment holds a great deal of meaningful data which is key to any successful Industry 4.0 project. Tech Mahindra’s solution in partnership with Cisco, will enable us to leverage this data and empower manufacturers to build factories of the future. As part of our TechMNxt charter we are focused on leveraging 5G technologies to address our customer’s evolving and dynamic needs, and enable them to RISETM.”
Tech Mahindra is also looking for strategic investments and acquisition in companies to further bolster its telecom product and services portfolio. The company says the following about their 5G capabilities and experience:
Tech Mahindra provides range of services that enable enterprises to establish private wireless network to span areas of operations & enable a plethora of IoT use cases. Our services remove inefficiencies related to slow, insufficient wireless connectivity & have a strong roadmap to support growing traffic demands for 5G establishment. From media to medicine we believe 5G is “The NXT of Everything.”
Tech Mahindra ccomplishments listed are these:
- 1M+ carrier grade cellular sites designed, delivered and managed
- Enabling 3 of the first 5 carrier 5G introductions in the world
- Strong Telco partnership/reach (80+ Global Tier 1 Telcos)
- 4 smart cities projects launched, Largest WIFI deployments in the world
- 5 connected vehicles engagements, 40+ Connected factories, 12000+ factory Assets
- 600+ Turbines and 100+ aircrafts connected; 2000+ remote healthcare patients supported
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Dell’Oro: Telecom Equipment Market declined 4% YoY; Statista: $49.3B revenues in 2020
Preliminary estimates suggest 1Q20 revenue shares relative to 2019 revenue shares for the top five suppliers – the latter indicated herein parenthesis – show that Huawei, Nokia, Ericsson, ZTE, and Cisco comprised 28% (29%), 15% (16%), 14% (14%), 11% (10%), 6% (7%), respectively.
Table 1: Telecom equipment market shares
| Vendor | 2019 market share | Q1 2020 market share |
| Huawei | 29% | 28% |
| Nokia | 16% | 15% |
| Ericsson | 14% | 14% |
| ZTE | 10% | 11% |
| Cisco | 7% | 6% |
| Source: Dell’Oro Group | ||
Additional key takeaways from the 1Q2020 reporting period include:
- Following two years of consecutive growth in 2018 and 2019, the overall telecom equipment market started the year on a weaker note, reflecting mixed market conditions as the positive market sentiment with mobile-related segments, including RAN and Core, was not enough to offset reduced demand for Broadband Access, Routers and CE Switch, and Optical/Microwave Transport.
- While healthy end-user fundamentals and positive 5G momentum outweighed downward risks associated with the COVID-19 pandemic for both RAN and Core investments, the pandemic had a more material impact on some of the non-wireless related segments, driven partly by supply chain disruptions and weakened demand as a result of increased macroeconomic uncertainty.
- Within the technology segments, Mobile RAN and Core revenues together advanced at a single-digit rate, accounting for nearly half of the overall telecom equipment market during 1Q20. At the same time, the combined revenues for Broadband Access, Microwave Transport, and Routers and CE Switch declined at a double-digit pace Y/Y, accounting for about a third of the overall market.
- In contrast to previous recessions, the COVID-19 slowdown is shifting and transforming the way we use the network. But a shift in how users are consuming data doesn’t necessarily result in a corresponding increase in spending on new infrastructure to support that traffic growth. Some suppliers and service providers indicated that network capacity upgrades were required to accommodate data traffic growth, however, traffic surges did not lead to significant demand for network capacity upgrades across all the telecom equipment segments.
- Even though the pandemic is still inflicting high human and economic losses, the Dell’Oro analyst team collectively expect market conditions and supply chain risks to be more favorable in the second half of 2020, propelling the overall telecom equipment market to advance 1% in 2020, reflecting a downward revision from the previous 2% growth outlook.
Dell’Oro Group telecommunication infrastructure research programs consist of: Broadband Access, Microwave Transmission & Mobile Backhaul, Mobile Core Networks, Mobile Radio Access Network, Optical Transport, and Service Provider (SP) Router & Carrier Ethernet Switch.
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Separately, Statista reports that telecom equipment spending is projected to increase from 44.8 billion U.S. dollars in 2015 to around 49.3 billion U.S. dollars in 2020. In 2019, the estimated revenue of the entire global telecommunications industry was US $610.4 billion.
Ericsson, Cisco Systems, Fujitsu, Nokia, NEC Corporation and Qualcomm are the leading telecom equipment companies worldwide. Cisco Systems is the leading Ethernet switch vendor, with more than 50 percent of the market share. Ethernet switches are an important and profitable part of the industry, as they are an integral part of IT infrastructure. They are used to receive, process and transmit data between two devices connected by a physical layer. Together, the top 5 vendors of Ethernet switches generated more than 25 billion U.S. dollars in revenue in 2017. Cisco is also the main vendor of enterprise WLAN, accounting for 45 percent of the global market share. HPE/Aruba, Arris/Ruckus, Ubiquiti and Huawei are also important vendors of enterprise WLAN worldwide.
Ethernet switch, WLAN and telecom towers are only a few examples of telecom equipment. This industry is vast, and includes other important markets such as smartphones. More than 1.5 billion smartphones were sold worldwide in 2017. Samsung, the global mobile market leader since 2012, sold about 20 percent of this total. Apple and Huawei are Samsung’s closest competitors in the market, with around 14 percent and 10 percent of the global smartphone market share respectively.
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