While the optical transport equipment market declined 18 percent year over year in the third quarter of 2024 due to reduced global demand, Dell’Oro Group said the market could bounce back in 2025.
Jimmy Yu, Vice President at Dell’Oro Group, said the demand for optical transport equipment is “significantly lower.”
“Although customer inventory is still a factor causing the declining optical sales, we believe unfavorable macroeconomic conditions had a larger influence on the current market results,” he said. “This is best exhibited by the market contraction in some important geographic regions where customer inventory levels were not elevated, such as Europe and China.”
Geographic challenges
Across all major geographic regions, optical equipment revenue contribution was down year-over-year.
The research firm noted that most regions declined more than 20 percent in the quarter, with the highest declines occurring in India and China. India posted a revenue decline of 40 percent, and China posted a revenue decline of 30 percent.
From a vendor perspective, Huawei, Ciena, and ZTE gained the most market share during the third quarter.
This group, said Dell’Oro Group, had estimated a gain of four percentage points.
The vendor with the subsequent highest share gain was ZTE.
2025 recovery coming
While 2024 was challenging because of the customer inventory correction that began in the fourth quarter of 2023, the market will see a new light in 2025.
According to comments it got from vendors it spoke to indicate that “order flow is increasing, and optical revenue in the North American region, where most of the excess inventory build-up occurred, is improving.”
As a result, Dell'Oro Group has forecasted that the Optical Transport market will return to growth in 2025. This will be due to two factors: the customer inventory correction phase ending in late 2024 and an improvement in global economic conditions early in 2025.
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Sean Buckley
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