After substantial expenditures in the first half of 2020, traditional telecommunications operators in North America (Incumbent and Wholesale) significantly reduced their expenditures on optical and packet hardware in the fourth quarter. According to the fourth quarter transmission customer market report released by Cignal AI, the expenditure of these operators has plummeted by nearly 40%.

Scott Wilkinson, chief analyst of transmission hardware, said: “North American network operators spent much less than usual in the fourth quarter of 2020. Earlier in 2020, due to the uncertainty brought by the COVID-19 pandemic, operators The capital budget is exhausted in advance, and then focus on deploying and using the purchased equipment. But this situation will change in 2021 as the cloud service providers first and then traditional operators return to normal consumption patterns.”

Other key points:

  1. In the fourth quarter of 2020, cloud and hosting operators in the Asia-Pacific region increased their spending on optical hardware significantly, but declined in EMEA (Europe, Middle East and Africa) and North America.
  2. Ciena’s optical transmission equipment revenue from cloud operators has declined, but it has maintained its market leading position in 2020. Huawei (due to growth in the Asia-Pacific region), Nokia and Infinera have all achieved market share growth.
  3. Huawei remains a leader in the sales of optical and packet transmission equipment for traditional telecom operators. The company’s market share has not yet fallen due to the growing political pressure in the EMEA region.
  4. The spending of enterprises and governments on optical hardware is flexible; beyond expectations, it has fallen due to the pressure of COVID-19.
  5. With the lifting of restrictions on the new crown epidemic, the resolution of operational difficulties, and the return of enterprises to normal operations, the transmission equipment market is expected to resume growth in the second half of 2021. The demand will come from cloud and hosting operators first, followed by traditional telecom operators.