North American optical hardware spend grows 20% in 2Q22, surpasses pre-COVID levels: Cignal AI
North American network operators spent 20% more on optical network hardware in the second quarter of 2022 than in the year-ago quarter, according to new research from Cignal AI. The market research firm says in its new Transport Hardware Report that such spending by traditional network operators and large cloud operators during the quarter surpassed pre-pandemic levels.
“Funding for broadband infrastructure, continuing 5G rollouts, and pent-up demand because of supply chain disruptions have catalyzed growth in North American transport spending,” commented Kyle Hollasch, lead analyst for transport hardware at Cignal AI. “Massive order backlogs and an anticipated easing of supply issues point to a period of rapid spending growth for service providers and cloud operators in the region.”
Worldwide, optical network equipment spending grew 3% year-over-year in 2Q22 thanks to strength in North America and China that offset weakness everywhere else. For example, while North American optical hardware revenues achieved the highest second-quarter level on record, European spending declined. EMEA’s slowdown resulted from a shift from transport to RAN spending as well as a disadvantageous dollar exchange rate, Cignal AI notes.
Worldwide, cloud and colo operators remained a growth engine, spending more than 10% versus the year-ago quarter. Traditional service provider spending was roughly flat, while enterprise and government outlays declined year-over-year for the fifth consecutive quarter. Cignal AI cited a return to normal spending levels from the heights seen levels during the pandemic as the reason for the poor performances of the enterprise and government sectors.
Worldwide packet transport sales roughly followed the optical transport market. Such spending grew 6%, driven by cloud and colo operators, whose spending grew 16%. North American packet transport sales climbed more than 30%, while such sales in EMEA declined.
Cignal AI’s Transport Hardware & Markets Report is issued each quarter and examines optical and packet transport equipment revenue across all regions, customers, and equipment types. The initial analysis is based on financial results, independent research, and guidance from individual equipment companies. Hardware forecasts are reviewed and updated in the following weeks, along with spending trends by operator type. The report examines revenue for metro WDM, long-haul WDM and submarine (SLTE) optical equipment, and access, aggregation, edge, and core packet equipment in six global regions. It also tracks equipment spending by end-customer market type, including traditional service provider, cloud/hyperscale, and enterprise/government network operators.
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Stephen Hardy | Editorial Director and Associate Publisher, Lightwave
Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.
Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.
He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.
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