Global Telecommunications Equipment Market To Decline By 5% In 2023

Stefan Pongratz, vice president and analyst at market research firm Dell'Oro Group, wrote in a latest blog post that the global telecommunications equipment market experienced five consecutive years of growth and a stable development trend in the first half of 2023. The pendulum quickly swung to negative growth in the first half of the year. Preliminary findings indicate that the global telecommunications equipment market revenue tracked by Dell'Oro Group, including projects in six telecommunications segments, will decline by 5% year-on-year in 2023, and the performance is worse than expected. The six telecommunications segment projects are broadband access, microwave and optical transmission, mobile core network (MCN), radio access network (RAN), and SP routers and switches.

Stefan Pongratz points out that there are multiple forces at work. First and most importantly, it is relatively difficult for some advanced 5G markets with relatively high 5G population coverage to achieve growth. Coupled with the slow migration of operators to 5G SA, this has led to a sharp decline in wireless investment to a certain extent. This decline in capital expenditure is not limited to the RAN and mobile core areas. After several years of strong PON investment, operators are also cutting back on capital spending on home broadband. This reduction in spending offset positive developments in the optical transport and SP router markets.

The North American market is shrinking faster than expected. Preliminary data shows that the total telecom equipment market in North America fell by about a fifth, affected by weakness in RAN and broadband access businesses. On the bright side, the situation outside the United States is more favorable. Dell'Oro Group's assessment is that global telecommunications equipment market revenue excluding North America will grow in 2023, as positive developments in the Asia-Pacific region will largely offset weaker growth across the European region.

Regional and technology trends are also being driven by disruption caused by hoarding and supply chain crises caused by the coronavirus pandemic. While this inventory correction is not felt everywhere and varies across telecom segments, it has been more pronounced in the RAN market over the past year. Renewed worries about macroeconomic conditions, foreign exchange and rising borrowing costs also weighed on the growth outlook. The dollar's appreciation against the yuan and yen is affecting dollar-denominated equipment revenue forecasts for China and Japan.

The Dell'Oro Group report shows that the ranking of telecommunications equipment suppliers has remained basically unchanged; however, supplier revenue shares have changed slightly in 2023. Despite this, the overall concentration level has not changed - the top 7 suppliers account for around 80% of the total market. A major theme across the various telecom segments tracked by Dell'Oro Group is that Huawei continues to dominate the global telecom equipment market despite ongoing U.S. government efforts to limit Huawei's addressable market and access to the latest chips. leader position. Stefan Pongratz writes, “In fact, our assessment is that Huawei’s lead widens in 2023, in part due to the limited scale of its business in North America. advantageous."

According to the statistical chart of Dell'Oro Group, in 2023, Huawei will occupy the first place in the global telecommunications equipment market with a market share of 30%, followed by Nokia (15%), Ericsson (13%), ZTE (11%), Cisco ( 6%), Ciena (4%) and Samsung (2%), and the remaining manufacturers account for about 20% of the total.

The analyst noted that the market environment is expected to remain challenging in 2024, but the decline is not expected to be as severe as in 2023. The Dell'Oro Group analyst team jointly predicts that global telecommunications equipment market revenue will shrink by 0% to 5% in 2024. The risks are roughly balanced. In addition to currency fluctuations, economic uncertainty and inventory normalization, there are multiple regions/technical areas that are in a state of instability.

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