Optical Transport Equipment Market Shows Resilience with Strong Q4 Growth Despite Annual Decline

Resilient Growth in the Optical Transport Equipment Market

The Optical Transport equipment market displayed remarkable growth at the close of 2024, according to a recent report by the Dell'Oro Group, a leading market analysis provider in telecommunications and related sectors. Despite a 13% decline throughout the entire year, the market managed to rebound by approximately 45% in the fourth quarter. This resurgence signals a strong recovery from the challenges faced earlier, predominantly driven by a balance in supply and demand as excess inventories have been cleared out.

Strong Fourth Quarter Performance

In the fourth quarter of 2024, the optical transport equipment sector recorded one of its highest growth rates observed in recent years. This incremental rise was not just limited to a specific region such as China, renowned for its seasonal spikes, but was evident across various territories, including North America, which saw its third consecutive quarter of revenue growth. In fact, the optical transport market outside China experienced a robust sequential growth of approximately 35%.

Inventory Corrections and Market Dynamics

The inventory adjustments initiated in the last quarter of 2023 laid a solid foundation for this growth. According to vendor feedback, order flow has seen a notable increase, showcasing improvements in optical revenues across North America, where a large portion of inventory corrections occurred. This positive trend reflects a significant turnaround from the earlier prolonged contraction phase that dominantly characterized the market.

Leading Players and Market Share Gain

In 2024, the top five players in the optical transport equipment market were Huawei, Ciena, Nokia, ZTE, and Infinera. Notably, Huawei maintained the largest market share, commanding 33% of total sales, followed by Ciena at 19%. Although Nokia's acquisition of Infinera has yet to finalize, a merger would place their combined market share at an equal 19%. Moreover, three companies made headway in gaining market share for the year; Huawei added three percentage points while both ZTE and Cisco each picked up one percentage point across the identified regions.

Future Projections

As stated by Jimmy Yu, Vice President at Dell'Oro Group, “There is light at the end of this tunnel.” His insights suggest optimism towards an end to the revenue contraction that began in late 2023, with indications pointing towards a sustained recovery. The remarkable growth during the last quarter of 2024 implies that the equipment surplus appears to be subsiding, offering promising prospects for upcoming quarters in 2025.

About the Report

The Dell'Oro Group Optical Transport Quarterly Report provides in-depth market insights, including comprehensive tables of manufacturers' revenue, average pricing, and unit shipments categorized by speed (up to 1.2+ Tbps). This report tracks different optical transport technologies such as Dense Wavelength Division Multiplexing (DWDM), long-haul WDM, multi-service multiplexers (SONET/SDH), and more. For those interested in acquiring this report, further information can be sought by reaching out to Dell'Oro Group directly.

With an improving outlook and solid market performance indicators, stakeholders in the optical transport equipment sphere are encouraged to stay informed and strategically align themselves with industry trends as we move forward into 2025.