Preliminary estimates from market researcher Dell'Oro indicates the overall telecom equipment market grew 10 percent year-over-year (Y/Y) during 1H21 and 5 percent Y/Y in the quarter, down from 16 percent Y/Y in the first quarter.
The growth in the first half was primarily driven by strong demand for both wireless and wireline equipment, and the weaker US dollar. Helping to explain the Y/Y growth deceleration between 1Q and 2Q is slower growth in China says analyst Stefan Pongratz. The chart shows Ericsson picking up busines as Nokia slows.
The chart also shows the dominant position of Huawei in Broadband Access, Microwave & Optical Transport, Mobile Core & Radio Access Network (RAN), SP Router & Switch, despite its focus at the heart of the US-China trade war. Ongoing efforts by the US government to curb the rise of Huawei are starting to show in the numbers outside of China, not just for RAN but in other areas as well. Though Huawei is not able to procure custom ASICs for its telecom products, the supplier is assuring the analyst community its current inventory levels is not a concern over the near term for its infrastructure business.
The collective global share of the leading suppliers remained relatively stable between 2020 and 1H21, with the top seven vendors comprising around 81 percent of the total market. “Within the mix, we estimate Huawei and Nokia lost some ground between 2020 and 1H21 while Cisco, Ericson, Samsung, and ZTE recorded minor share gains over the same period,” he said.
This would be the fifth consecutive quarter of growth, following the year-on-year decline at the start of the pandemic in 1Q20. The growth in the first half was relatively broad-based, underpinned by single-digit growth in SP Routers and double-digit advancements in Broadband Access, Microwave Transport, Mobile Core Networks and radio access network (RAN) technologies. The company recently significantly increased its projections for the OpenRAN market.
From a regional perspective, China underperformed in the quarter, impacting the demand for both wireless and wireline-related infrastructure.
The majority of the vendors have taken proactive measures to navigate the ongoing supply chain shortages and minimize the infrastructure impact. At the same time, the supply constraints appear more pronounced with higher volume residential and enterprise products including CPE and WLAN endpoints with continuing shortages.
Even with the unusual uncertainty surrounding the economy, the supply chains, and the pandemic, the Dell’Oro analyst team remains optimistic about the second half – the overall telecom equipment market is projected to grow 5 to 10 percent for the full-year 2021, unchanged from last quarter.
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