Market Insight

Optical equipment market continued to struggle in Q2 2018

August 28, 2018

Heidi Adams Heidi Adams Senior Research Director, Transport Networks
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Highlights

  • In the second quarter of 2018 (Q2 2018), global optical network hardware revenue totaled $3.5 billion, decreasing 7 percent on a year-over-year basis.
  • The global Q2 2018 optical equipment market net of China was down 3 percent year over year. China itself declined 17 percent year over year.
  • Wavelength division multiplexing (WDM) revenue totaled $3.3 billion in Q2 2018, up 9 percent quarter over quarter, but down 6 percent from a year ago.
  • Huawei remained the overall optical equipment market leader in Q2 2018, increasing its market share to a new high of 36 percent. Ciena moved into the number-two position, and Nokia dropped to third.

Our analysis

The optical equipment market continued to struggle in Q2 2018 due to the following factors:

  • Lower spending in China; ZTE shuttered major operations for most of the quarter
  • A big drop in submarine line terminal equipment (SLTE) spending
  • A slowdown in long-haul spending by tier-1 operators in North America

Even a healthy internet content provider (ICP) segment has not been enough to offset the spending declines of the major operators in North America. Europe, the Middle East and Africa (EMEA) remained flat year over year. The Caribbean and Latin America (CALA) saw sequential growth, but the region continued its overall year-over-year downward trend of diminishing network infrastructure investment. Meanwhile, in Asia Pacific, India remains very strong for optical spending and Japan is emerging as an area of renewed investment.

The WDM equipment segment increased sequentially but declined on a year-over-year basis – as did the metro and long-haul WDM sub segments. IHS Markit continues to view the metro WDM sub segment as the main growth vector for the market through at least 2022. Subsea-related optical equipment investment continues to be project driven and highly variable, with second quarter SLTE at half the level seen in the same period last year.

Looking ahead, IHS Markit forecasts a positive optical equipment market compound annual growth rate (CAGR) of 4 percent from 2017 through 2022.

Optical Network Hardware Market Tracker – Q2 2018

This report tracks the global market for metro and long-haul WDM and SONET/SDH equipment and SONET/SDH and WDM ports. It provides market size, market share, forecasts through 2022, analysis and trends.

 

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