Optical transport sales take unexpected jump in 1Q 2023: Dell’Oro

Thanks to a significantly improved supply chain, sales of optical transport gear exceeded expectations in the first quarter of 2023, according to Dell’Oro Group. As revealed in the market research firm’s most recent Optical Transport Quarterly Report, revenues for optical network hardware climbed 8% percent year-over-year during the quarter.

“For a second consecutive quarter, the optical transport equipment market growth exceeded our expectations,” commented Jimmy Yu, vice president at Dell’Oro Group. “Equipment manufacturers are benefiting from the record level of backlog built up over the past two years due to a lack of component supply. As these shortages moderate and lead times shrink, vendors are in a position to deliver long-awaited DWDM systems to their customers.

“This was the first time in two years that we did not hear a single vendor mention component shortage as a reason for lower than expected revenue in the quarter,” added Yu.

The jump would have been even bigger if not for a decline in revenues from China. With that country excluded, the rest of the world market for optical transport equipment increased 12% year-over-year. Data center operators again served as a strong engine for growth, climbing year-on-year for the second consecutive quarter.

The revenue surge has Yu more optimistic about 2023 than he was going into the year. In an email to Lightwave, Yu wrote that he’s increased his revenue growth forecast for 2023 by a percentage point, to 4%. “I definitely think the 4% is on the lower end of possibilities,” he wrote. “A few factors sort of weigh on my 2023 forecast: the rate of China’s economic recovery, whether a recession or fear of recession slows spending in 2H23 in North America, and at what rate manufacturers can catch-up on backlogged orders.”

The manufacturers who were most successful in eating into their backlogs during 1Q23 included Huawei, Ciena, Nokia, ZTE, and Infinera, according to the report. For the trailing four-quarter period, Nokia saw optical revenue grow 13% and Infinera saw 20% growth.

Dell’Oro’s Optical Transport Quarterly Report covers manufacturers’ revenue, average selling prices, and 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.

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