Worldwide optical transport systems sales down 2% in 2021 but headed for rebound: Dell’Oro

The global optical transport systems market shrank 2% in 2021, to $15 billion, according to a new report from Dell’Oro Group. However, given the fact that every regional market in the world showed year-on-year growth except for Asia Pacific, the market research firm expects overall growth to return this year.

Sales of optical network hardware declined 11% in the Asia Pacific market last year, with much of this total due to a 9% reduction in Chinese spending. That double-digit dip was enough to offset upticks of 12% in North America, 6% in Europe, and 19% in Latin America.

“The optical transport market outside of Asia Pacific improved in the year, following a momentary slow down caused by the pandemic in 2020,” commented Jimmy Yu, vice president at Dell’Oro Group and author of the report, via a Dell’Oro press release. “It was a noticeably strong year for optical systems in all the other regions. In fact, with the exception of Asia Pacific, optical revenue in 2021 surpassed the pre-pandemic levels in each of the regions. The biggest issue facing the industry is the ongoing component shortage and supply chain bottlenecks. Without these issues, the optical market would have grown at a much higher rate.”

In an emailed response to questions from Lightwave, Yu indicated that 2022 will see a return to growth. “I’m expecting a good recovery for the optical transport market in 2022,” he wrote. “I’m currently predicting a 5% growth this year.”

That said, supply chain constraints will continue to weigh on the market. “Supply chain is expected to continue being a headwind for the market through 2022, holding back growth and increasing costs. As a result, all vendors are asking for longer lead times and asking customers to place earlier orders, driving record backlog levels at optical system companies,” wrote. “Also, while difficult to do, some vendors are increasing prices to shore up profit margins that have been under pressure from the rising costs of components and shipping/transportation.

“I am expecting supply chain to be an issue through most of 2022. That said, many vendors think improvements in supply chain will begin to occur mid-year with a full recovery by 2023,” Yu concluded.

Dell’Oro’s Optical Transport Quarterly Report covers that market with tables that detail 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 sales.

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