Global Optical Communications Market Dynamics – February 2023

Chapter 1  Q322 Global Fixed Broadband Market

1.1 Q322 Global Broadband Growth Trend Analysis

1.2 Net Increase Share of Fixed Broadband Users in the Q322 Region

1.3 Growth of Optical Broadband Users in Q322 Continents

1.4 Q322 Global Broadband User Net Growth Top 10 Countries

1.5 Q322 Fixed Broadband Technology Development

1.1 Q322 Global Broadband Growth Trend Analysis

According to Point Topic data, by the end of the third quarter of 2022, the number of global fixed broadband connections increased by 1.87% month-on-month to 1.34 billion. In this quarter, Point Topic recorded a decline in the number of fixed broadband users in 11 countries, including emerging markets and mature markets in some developed countries.

The growth rate in the third quarter of 2022 was the highest in the past quarter, but lower than that in the third quarter of 2021. Among all regions, broadband connections in other regions of Asia have the fastest growth rate of 2.6%, mainly due to the low broadband penetration rate in India, Nepal, Malaysia, and the United Arab Emirates, and the healthy growth of broadband users. The share of FTTH and FTTB in the total number of fixed broadband users continued to rise to 65%. Ultra-high speed and ultra-fast wired broadband connections followed, with a share of 17%, while ADSL dropped to 9%. The countries with the highest growth rate of optical broadband users in the third quarter of 2022 are India, Brazil, France, and Mexico.

1.2 Net Increase Share of Fixed Broadband Users in the Q322 Region

The largest regional broadband market in East Asia has maintained a large share of the net growth of fixed broadband users. 65.5% in the third quarter of 2022, mainly due to the increase in China’s market size and more than 15 million fixed broadband users. However, East Asia’s share of net growth declined from 70.2% in the second quarter of 2022. The share of net growth in other regions of Asia also decreased from 16.7% in the second quarter of 2022 to 15% in the third quarter of 2022. Since Europe’s net growth in most markets in this quarter was high, so were most other regions. Unlike the second quarter of 2022, due to the relatively small decline in fixed broadband users in Ukraine, we recorded a positive net increase in Eastern Europe this quarter. Ukraine managed to maintain the operation of its broadband infrastructure through power backup and continued to recover after the destruction caused by the shelling.

1.3 Growth of Optical Broadband Users in Q322 Continents

In the third quarter of 2022, the quarterly growth of the number of fixed broadband users in all regions was higher than that in the second quarter of 2022 (Figure 5), which is typical of the third quarter of a year. The most significant growth was in Eastern Europe (2%). In the third quarter of 2022, the growth rate in other regions of Asia was the fastest (2.6%), mainly due to the low broadband penetration rate and the healthy growth of broadband users in major markets such as India, Nepal, Malaysia, and the United Arab Emirates.

The penetration rate of fixed broadband in Africa and other parts of Asia remains the lowest, with 4.4% and 5.5% respectively. The quarterly growth rate of both regions exceeded 2%. The same is true for East Asia and the Americas, although the former has the highest population penetration rate of 40.3%.

1.4 Q322 Global Broadband User Net Growth Top 10 Countries

1.5 Q322 Fixed Broadband Technology Development

Between Q321 and Q322, the share of FTTH connections in the total number of fixed broadband users increased by 0.7% to 61.4%. FTTB accounts for 4% of the global total. The market share of Cable and ADSL broadband connections shrank further, with 17% and 9.4% respectively. The number of VDSL users in 15 countries increased (including large VDSL markets such as Tunisia, Türkiye, the Czech Republic, Germany, and Italy), while the number of VDSL users in at least 19 other markets declined as consumers switched to optical fiber.

Globally, the number of Coppers has decreased by 9.8% in the past year, while the number of FTTH connections has increased by 12.3%. Satellite broadband connections increased by 4% because this technology is increasingly deployed in places where it is difficult to deploy fast wired networks, enabling users to access broadband. For example, in the UK, Starlink satellite broadband is being tested in remote areas in northern England and Wales.

Chapter 2- Investment and Network Construction of Operators

2.1 Operation of the Three Major Operators in January

2.2 Centralized Purchase by Operators

2.3 Dynamics of Domestic and Foreign Operators

2.1 Operation of the Three Major Operators in January

• China Mobile’s mobile subscribers increased by 503,000 in January. The number of 5G package customers increased by 8.469 million. In terms of broadband, the number of users increased by 2.529 million, and the cumulative number of broadband users reached 275 million.

• China Telecom’s net mobile subscribers increased by 1.13 million in January, reaching a total of 392 million. The number of broadband users increased by 970,000, reaching a total of 182 million. This month, China Telecom’s 5G users added a net of 5.03 million, reaching a total of 273 million.

• China Unicom added 3.068 million 5G users in January, reaching a total of 216 million. The cumulative number of “big connection” users reached 873 million. The number of 5G industry virtual private network service customers reached 4,012. The number of IoT terminal connections also reached 395 million.

• In terms of 5G users, the three major operators added 16.567 million new 5G package users in January, a decrease of 10.325 million compared with the previous month. The cumulative number of 5G package users totaled approximately 1.111 billion.

2.2 Centralized Purchase by Operators

• China Telecom Launches Centralized Procurement of 5G Fronthaul Equipment in 2023: An Estimated 113,000 Sets

China Telecom launched a centralized procurement project for 5G fronthaul WDM color light equipment (2023). According to the announcement, the project is divided into package 1: CWDM color light equipment, and package 2: LWDM color light equipment. The estimated purchase scale is 113,000 sets. Among them, the main products involved in CWDM colored light equipment are: CWDM 25G 6-wavelength estimated purchase of about 33,000 sets, CWDM 10G 6-wavelength estimated purchase of about 67,000 sets, CWDM (circulator) 6-wavelength estimated purchase of about 10,000 sets; The main product of optical equipment design is LAN-WDM semi-active. It is estimated to purchase about 3,000 sets.

• Huawei Wins the Bid for Shenzhen Telecom’s Third Batch of FTTR Equipment Procurement Projects

In 2023, Shenzhen Telecom’s third batch of FTTR equipment procurement projects will be purchased by China Telecom Co., Ltd. Shenzhen Branch. The project funds have been secured and the procurement conditions are now met. It is planned to adopt a single-source procurement method, and it is now publicized. The single source procurement supplier is Huawei Technologies Co., Ltd. Purchased 3,550 all-photonic gateways.

• China Telecom Starts Centralized Procurement of Passive Components (2023): Estimated 8.8687 Million

China Telecom launched a centralized procurement project for passive components (2023), the procurement content is the passive components required by China Telecom Group Co., Ltd., China Telecom Co., Ltd., and their subsidiaries and branches in various projects from 2023 to 2025 Device products mainly include power splitters, combiners, couplers, bridges, attenuators, and loads. The estimated purchase quantity is 8,868,700.

• China Mobile Launches 2023-2024 Centralized Procurement of Intelligent Enterprise Gateway Products with a Total of 4.26 Million Units

China Mobile launched the announcement of the 2023-2024 centralized procurement of intelligent enterprise gateway products (public procurement part), planning to purchase 4.26 million units of intelligent enterprise gateway products. Among them, there are 3.06 million integrated enterprise gateways, 400,000 enterprise gateways (GPON WiFi-5), 300,000 enterprise gateways (XGPON), 250,000 enterprise gateways (GPON WiFi-6), and outdoor enterprise gateways (without WiFi) 250,000 units.

• China Mobile Plans to Purchase 1,622 Aggregation and Distribution Equipment Products

China Mobile has launched a new partial centralized procurement project for convergence and distribution equipment from 2023 to 2024 and plans to purchase a total of 1,622 convergence and distribution equipment products. Among them, there are 355 box-type basic function devices; 616 box-type advanced function devices; and 651 card-type advanced function devices.

• Guangdong Mobile’s First Batch of All-optical WIFI (FTTR) Terminal Collection Results

China Mobile Guangdong Company announced the results of the first batch of all-optical WIFI (FTTR) terminal open comparison projects in 2023. Huawei, ZTE, Zhaoneng Communication, and Ruijie Networks were selected. The specific shares are as follows: standard package 1 Selected candidates: Huawei Technologies Co., Ltd. (75% share) and ZTE Corporation (25% share); selected candidates for the second package: ZTE Corporation (75% share) and Shenzhen Zhaoneng Communication Technology Co., Ltd. Limited company (25% share); Candidates for bid package three: Shenzhen Zhaoneng Communication Technology Co., Ltd. (60% share) and Ruijie Networks Co., Ltd. (40% share); Guangdong Mobile’s 2023 all-optical WIFI (FTTR) first batch of terminal procurement budget The amount is 153.0067 million yuan (excluding tax), of which the standard package 1: full-optical WIFI (XGPON PTMP), the budget is 114.75 million yuan excluding tax; the standard package 2: full-optical WIFI (GPON PTMP), the budget is 30.2388 million yuan excluding tax RMB; standard package three: all-optical WIFI (GPON PTP), budget 8.0179 million yuan excluding tax.

2.3 Dynamics of Domestic and Foreign Operators

• Frontier Plans to Invest $100 Million to Expand West Virginia Fiber in 2023

Frontier plans to invest about $100 million in 2023 to expand its fiber optic network in West Virginia. This is the largest investment announced by a communications service provider in the state. Since 2021, Frontier has built fiber optics to more than 125,000 homes and businesses in more than 60 urban and rural areas of West Virginia, including Beckley, Bluefield, Charleston, Clarksburg, Falls, Huntington, Hurricane, Inwood, Kanawha City, Morgantown, Parkersburg, Scott Depot and Wheeling. The company plans to add more than 100,000 locations in West Virginia this year, with additional locations in Elkins, Fairmont, Grafton, Hinton, Logan, Nitro, Princeton, and St. Albans, WA Deploying fiber in new areas such as Leonton and Woodsdale. In addition to investing $100 million in the state in 2023, Frontier is partnering with the West Virginia Office of Economic Development Broadband to deploy fiber to underserved and unserved areas of the state.

• YouFibre Selects Smartoptics to Simplify 400G Optical Network Upgrade

Smartoptics, a provider of optical network solutions, announced that YouFibre, a British full-fiber broadband provider, has selected Smartoptics’ optical network solution to upgrade its 400G network. Simplicity and cost-effectiveness allow the optics to be plugged directly into YouFibre’s existing routers. YouFibre is an FTTH broadband service provider serving the UK market, providing fast and cost-effective full-fiber broadband for British families and businesses. The rapid growth of users in Northeast England prompted YouFibre to upgrade the regional network capacity from 100G to 400G. After comparing different solutions, the Smartoptics passive multiplexing solution matching DVP-F amplifiers and 400G optics was successfully selected. The amount of new network components connects directly to your fiber’s existing routers. “Smaroptics helped us realize that optical and router layer merging could be achieved simply by plugging optics directly into existing routers and taking advantage of available QSFP-DD ports,” said Sam Defriez, director of networking at YouFibre. More cost-effective and easier to deploy. We appreciate this strategic buying advice and the on-site support provided by Smartoptics for fast and smooth deployment. This solution is easily scalable, allowing us to meet further surges in bandwidth demand, and is essential to support our UK-based Continued growth is critical.”

• Google Fiber Plans More Expansions in Colorado and Arizona

Google Fiber’s revised expansion plans in several states took another step forward this week, announcing that it will expand service to Westminster, Colorado, and Chandler, Arizona. The move would put Google Fiber in competition with incumbents such as Comcast and Lumen in Colorado, and Cox Communications and Lumen in Arizona. Google Fiber said it had signed an agreement with the City of Westminster, with plans to start construction later this year and sign up its first customers in 2024. Meanwhile, Chandler council approved a licensing agreement allowing Google Fiber to build the fiber optic network last night. Likewise, Google Fiber is expected to begin construction later this year, with service beginning in early 2024. This latest expansion follows Google Fiber expansions to Lakewood, Colorado, and Mesa, Arizona. Google Fiber CEO Dinni Jain said the company is working with city leaders in five states — Arizona, Colorado, Nebraska, Nevada, and Idaho — to expand fiber-to-the-home (FTTP) service. Negotiate in various communities.

Chapter 3- Dynamics of System Equipment Suppliers

3.1 Juniper Q422’s Revenue Increased by 11% Year-on-year to $1.449 Billion

3.2 Cisco FY23Q2 Revenue Exceeded Expectations by 7% Year-on-year, Reaching 13.6 Billion US Dollars

3.1 Juniper Q422’s Revenue Increased by 11% Year-on-year to $1.449 Billion

• In the fourth quarter of 2022, Juniper’s network revenue was US$1.449 billion, an increase of 11% year-on-year and a quarter-on-quarter increase of 2%. GAAP net income was $180 million, up 36% year-over-year and 48% quarter-over-quarter. Non-GAAP net income was $214 million, up 16% year-over-year and 12% quarter-over-quarter.

• Rami Rahim, CEO of Juniper, said: “We experienced strong business momentum in the fourth quarter of 2022, including two consecutive quarters of double-digit year-over-year growth, record performance in our enterprise business, and our second-highest Cloud revenue quarterly. Our experience-first networking strategy, focused on leveraging artificial intelligence and cloud-delivered automation to improve customer operations and end-user experience, continues to resonate across the markets we serve. We believe our differentiated solutions, combined with our go-to-market investments and strong backlog, should position us for another year of solid revenue growth in 2023. “

• Looking ahead to the first quarter of 2023, Juniper expects revenue in the range of $1.29 billion to $1.39 billion. Non-GAAP gross margin is around 57%.

3.2 Cisco FY23Q2 Revenue Exceeded Expectations by 7% Year-on-year, Reaching 13.6 Billion US Dollars

Cisco’s revenue for the second quarter of fiscal 2023 was $13.6 billion, up 7 percent from a year ago. Product revenue was up 9 percent and services were up 2 percent compared to the same period last year. Net income of $2.8 billion declined 7 percent year-over-year. GAAP earnings per share of $0.67. Non-GAAP earnings per share of $0.88. GAAP gross margin was 62 percent, compared with 63.3 percent a year ago.

By region, Cisco’s revenue in the Americas was $7.825 billion in the second quarter of fiscal 2023, up 9 percent year-over-year; revenue in EMEA was $3.728 billion, up 5 percent year-over-year; and revenue in APJC was $2.039 billion
Looking ahead to the third quarter of fiscal 2023, Cisco expects revenue to grow 11 percent to 13 percent year-over-year. Non-GAAP gross margin will be 63.5 percent to 64.5 percent. full-year fiscal 2023 revenue will grow from 9 percent to 10.5 percent.
With Cisco’s strong second quarter performance, we are poised for a great year in fiscal 2023,” said Chuck Robbins, chairman, and CEO of Cisco. The modern, highly secure network we are building is the backbone of our customers’ technology strategy. This, coupled with our ongoing business transformation and operational success, gives me great confidence in our future.”

• ADVA’s 2022 Revenue Grows 18% Year-Over-Year to Record High

In the fourth quarter of 2022, ADVA generated revenues of 196 million euros, compared to 158 million euros in the same period last year, an increase of 24.1%. Preliminary gross margin was 36.5%, compared to 35.6% a year ago. Net income was 3,781 thousand euros, compared to 17,511 thousand euros in the same period last year, a decline of 78.4%.

For the full year 2022, ADVA’s revenue was €712 million, compared to €603 million last year, an increase of 18 percent. Gross margin was 33.7%, compared to 36.6% last year. 2022 ADVA net income was €18.132 million, compared to €59.218 million last year, a decline of 69.4%.

We are proud to announce a very successful fiscal year in which we achieved the highest revenue in the company’s history,” said Christoph Glingener, CEO of ADVA. Despite the ongoing challenges caused by the semiconductor crisis, supply chain bottlenecks, inflation, and recessionary concerns, we were able to stay the course and fully serve and support our customers with innovative communications technology, software, and services. Looking ahead, we are optimistic about our future growth prospects. We have a strong pipeline of new products and services and are well-positioned to benefit from key trends in our industry. We continue to grow our capabilities in software and services, providing increased value to our customers and partners. Together with Adtran, we will continue to focus on cost management and operational efficiency while investing in key areas to enter new growth markets.

• ADTRAN Q422 Revenue of $358 Million

For the fourth quarter of 2022, ADTRAN’s revenue was $358 million (including revenue from the consolidation of ADVA), compared to $154 million in the same quarter last year. Gross margin for the quarter was 29.98%, compared to 35.31% in the same quarter last year. Net income for the fourth quarter of 2022 was $34.955 million, compared to a net loss of $4.19 million in the same quarter last year.

For the full year 2022, ADTRAN’s revenue is $1,026 million compared to $563 million in 2021. 2022 gross margin is 31.91% and net loss is $8,888,000 compared to a loss of $8,635,000 last year.

Fourth quarter revenue was at the lower end of our guidance range at $358.3 million, with growth in optical networking solutions offsetting delays in new product introductions,” said Tom Stanton, chairman, and chief executive officer of ADTRAN Holdings. The supplied environment is improving year over year, which has positively impacted our gross margin. We also expect supply bottlenecks to continue to ease in 2023. Our strong growth in EMEA underscores our global reach and greater customer diversity as we enter an unprecedented network upgrade cycle.”

• System Equipment Vendor News 

1. Nokia and Tele2 Offer Private Wireless Services to Swedish Businesses

Nokia and Tele2 announced that they have partnered in Sweden. Tele2 can offer customers private wireless 5G using a solution based on the high-performance Nokia Digital Automation Cloud (DAC) end-to-end private wireless network and edge computing platform. enterprises will be able to benefit from secure, robust, low-latency asset connectivity and real-time field data processing.

Using this data in conjunction with analytics, machine learning (ML) and artificial intelligence (AI), they can enable industry 4.0 business-critical use cases such as remote monitoring, predictive maintenance, self-driving cars and robots, and zero-failure manufacturing. We have extensive expertise serving 560 large private wireless customers across multiple sectors worldwide,” said Raghav Sahgal, president of Nokia Cloud and Network Services. We believe there is tremendous business potential for private wireless networks in Sweden. While most of the companies that have deployed private wireless in the country to date have been in the manufacturing sector, the opportunity to transform operations using the technology is significant for other industries, including mining, power plants, construction, agriculture, healthcare and public services. We are pleased to work with Tele2 as part of its network offer and to demonstrate use cases that will allow Swedish companies to transform their operations for the Industry 4.0 era.”

2. Nokia and Ericsson Expand Telecom Equipment Manufacturing in India

Changing consumer demand, coupled with continued 5G network deployment, presents significant opportunities for suppliers, with both Nokia and Ericsson, two telecom equipment suppliers, recently announcing the expansion of their manufacturing in India. Nokia will expand PON OLT manufacturing at its facility in Sriperumbudur, South India, to meet the growing demand for high-speed broadband in India, both domestically and internationally. There is a huge demand for fiber connectivity from both fixed line and mobile network operators in India,” said Sanjay Malik, senior vice president and head of India market at Nokia. The OLT production at our Chennai facility will drive this demand in time.”

A few months ago, another European supplier, Ericsson, announced that it will expand its capacity and operations at its Pune facility in western India with its partner Jabil to address the deployment of 5G networks in India. With the launch of 5G in India, we are expanding our 5G telecom equipment production in Pune in a phased manner to support the network deployment of Indian telecom service operators,” said Nunzio Mirtillo, Ericsson’s regional head for Southeast Asia, Oceania and India. The production in India is part of our global production footprint across all continents.”

It was also reported that in addition to Nokia and Ericsson, Samsung may invest about 4 billion Indian rupees ($48.47 million) to start manufacturing 4G and 5G wireless devices in India. Samsung’s largest mobile terminal equipment manufacturing plant is already located in India. While Nokia and Ericsson have had manufacturing units in India since 2008 and 1994, respectively, their manufacturing operations have been concentrated in China. However, the Indian government has now introduced the Production Linked Incentive (PLI) program to make it easier for telecom equipment suppliers to expand manufacturing. Nokia, Ericsson and Samsung three suppliers are participating in the Indian PLI program.

3. Bharti Airtel Deploys Ribbon’s Apollo Optical Transport Services Platform for Long-Haul DWDM Network Expansion

Ribbon said that Bharti Airtel, India’s leading telecom service provider, has selected Ribbon to build its new high-speed transport network. The project is based on a disaggregated approach and is a key part of Airtel’s modernization strategy, enabling them to deliver cost-optimized 5G mobile backhaul and high-speed enterprise business connectivity throughout northwest India. The modern network architecture leverages Ribbon’s Apollo programmable open optical transport platform suite, supporting up to 51.2T of combined C&L band network capacity, enabling Airtel to efficiently meet current and future bandwidth demands.

The long-haul solution will support the delivery of 100GE/400GE IP services over 400G optical channels. Finally, Ribbon’s Muse domain orchestration platform also provides real-time network monitoring and management at the click of a mouse. “Airtel has been pushing the boundaries of digital service delivery and we are proud to support their mission with our solutions and expertise,” said Sam Bucci, Chief Operating Officer of Ribbon. This massive new network will have a huge impact as it provides the extensive capacity to one of the world’s most populous countries.”

4. KT and DZS Partner to Deploy Gigabit-speed Network in Korea

DZS announced that KT Corporation, Korea’s largest wireline broadband service provider and a DZS customer since 2005, has selected the DZS Velocity Access EDGE platform and advanced Optical Light Terminal (OLT) technology for its new 10gb/s (Gbps) Fiber-to-the-Place (FTTP) Ethernet Passive Optical Network ( EPON) infrastructure, covering the southern part of the country, including Daegu, Busan and Gwangju regions. The network upgrade will support world-class residential and business Internet, voice and video services throughout the region.

Korea has long been recognized as a broadband and 5G world leader with some of the world’s fastest mobile and broadband Internet speeds and many of the most advanced applications, including large-scale AR/VR/XR and metaverse,” said Daniel Won, Chief Customer Officer of DZS Asia. We are proud that we continue to win the business of our long-time partners and global telecom leaders who rely on DZS to create next-generation EPON access network infrastructure for residential and commercial customers. We are one of the leading network equipment developers and suppliers in Korea, and by deploying the DZS Velocity platform, KT will significantly enhance their PON network and outperform their competition with world-class 10Gig services.”

DZS offers the industry’s broadest range of Access EDGE, Subscriber EDGE, Optical EDGE and cloud-based network orchestration and experience management solutions to drive gigabit network performance and differentiated subscriber experiences. By leveraging the DZS platform, “service providers” can quickly transform into “experience providers” as they enhance their access and/or mid-kilometer networks, better leverage and analyze the service performance and data available in their networks, and maximize DZS systems, platforms and technologies are standards-based, have proven interoperability with most vendors’ equipment, and are designed to be managed and orchestrated with third-party solutions.

5. Juniper Networks Expands Partnership with IBM to Bring Intelligent Automation to Wireless Network Solutions

Juniper Networks plans to expand its partnership with IBM to seek to integrate IBM’s network automation capabilities with Juniper Networks’ radio access network (RAN) optimization and open radio access network (O-RAN) technologies. The planned collaboration will seek to deliver a unified RAN management platform designed to use intelligent automation to better enable communications service providers (CSPs) to realize, optimize and scale their investments in next-generation networks and deliver a better experience for mobile users.

The two companies hope this new agreement will build on the existing collaboration between Juniper and IBM. The companies will look to combine Juniper’s RAN Intelligent Controller (RIC) with IBM Cloud Pak for network automation, with the goal of creating a fully integrated automated O-RAN and RAN solution. The goal of the solution is to provide end-to-end automation of secure 5G network slicing, from configuration to verification and deployment, monitoring and assurance of SLAs at runtime, to integrating Juniper’s RIC and Slice-aware use case capabilities with IBM Cloud Pak’s network automation policy engine.

6. Telkomsel Partners with ZTE to Achieve 2.3GHz-based Ultra-Long-Range 5G Coverage Over the Sea

Telkomsel, Indonesia’s largest mobile operator, and ZTE Corporation announced that they have completed a 2.3GHz band-based 5G network coverage test of ultra-long range base stations on the sea in Gorontalo, North Sulawesi Province, Indonesia, providing a solid digital base for 5G+ smart fisheries, helping to develop Indonesia’s fisheries and marine tourism, and promoting the deep integration of information technology and marine economy. Gorontalo is one of the most promising areas of Indonesia’s maritime economy, with a coastline of 903.7 km. The maritime and fishing industries are one of the main economic pillars of the region.

According to the Indonesian Ministry of Marine Affairs and Fisheries, as many as 19,013 fishermen depend on the sea for their livelihoods, and the availability of Internet network infrastructure is critical to promoting the quality development of the local marine digital economy. Telkomsel continues to strengthen its key capabilities in telecom networks and services and to provide the latest technologies as development needs dictate. Through strategic partnerships with cross-industry companies such as ZTE, Telkomsel is leveraging innovative technologies such as 5G to help the country’s digital transformation. With this 5G network coverage test of ultra-long-range base stations on the sea, we hope to provide better broadband access to the Gorontalo region and contribute to the sustainable development of the local digital economy.”

ZTE’s 2.3GHz end-to-end 5G sea coverage solution maximizes the coverage, capacity and quality of Telkomsel’s network in the sea to optimize shore-based ultra-long-range sea connectivity. Telkomsel will continue to work with ZTE on more innovative practices to expand 5G coverage in Indonesian waters to support more economic activities such as shipping, fishing, and tourism, and to continue to promote the digital, intelligent, and green development of the economy and society.

• Fiber Optic Cable Vendor Earnings Preview

 1. Corning Fiber

In 2022, Corning’s GAAP sales reach $14.2 billion, up 1 percent annually. Core sales will be $14.8 billion, up 5 percent annually. Of this total, optical communications sales exceed $5.0 billion, a 15 percent annual increase and the highest level ever. The optical communications segment’s net income is $661 million in 2022, up 20 percent annually, driven by 5G, broadband and cloud computing. Corning said the market is still in the early stages of a multi-year build-out cycle driven by broadband, 5G densification and cloud computing, and demand for fiber optic cables remains particularly strong. Core sales for the first quarter are expected to be in the range of $3.2 billion to $3.4 billion, with core EPS in the range of $0.35 to $0.42. Management expects sales to decline more than the original seasonal decline due to outbreak-related disruptions in China. Management has taken action to increase prices and improve productivity in the fourth quarter of 2022. The company expects the benefits of these initiatives to begin to materialize in the first quarter of 2023, and as a result, profitability will improve, although sales are expected to decline sequentially.

2. ZTT Cable

In 2022, the net profit attributable to shareholders of listed companies will be RMB 3 billion to RMB 3.3 billion, an increase of RMB 2.828 billion to RMB 3.128 billion, or 1643% to 1818% compared with the same period of the previous year (before retroactive adjustment). During the reporting period, the company practiced the business policy of “green drive, compliance and steady progress”, complied with the new economic order of “clean and low-carbon”, and won the high-quality development. In 2022, the company will benefit from the development opportunities brought by the “new infrastructure” speeding up, such as 5G, gigabit broadband, the “East Digital West Computing” project, etc. The company precisely identifies customer needs, extends the communication industry to the high-end, and lays out green energy products to enhance profitability; in the marine industry from system design, submarine cable structure design, material selection, etc. The company has been the main force in the construction of energy-saving extra-high voltage transmission lines by developing new generation transmission and distribution products and providing solutions with lower transmission losses. The company seized the opportunity of national vigorously promoting the application of new energy distribution and storage, actively expanding its production capacity and industrial advantages, and continued to release orders at home and abroad, accelerating the expansion of the energy storage business. In addition, the company further strengthened cost control, tapped internal potential, took multiple measures to reduce costs and increase efficiency, continuously strengthened the refined management of production processes, enhanced its core competitiveness and improved its overall sustainable development capability.

Chapter 4- Market Data and Analysis

4.1 LC: Slow Growth of Cloud and CSP Companies Threatens the Growth of Device and Equipment Manufacturers

4.2 Synergy Research: The Global Public Cloud Market Grew by 21% Against the Wind in 2012

4.3 Omdia: The Global PON Equipment Market Will Exceed US $18 Billion in 2007

4.4 Dell’Oro: The Service Provider Router Market will Continue to Grow in the Next Five Years

4.1 LC: Slow Growth of Cloud and CSP Companies Threatens the Growth of Device and Equipment Manufacturers

* LC data shows that in the fourth quarter of 2022, the revenue of almost all device and equipment manufacturers will grow at a double-digit rate. Meanwhile, Internet Content Providers (ICPs) and Communications Service Providers (CSPs) both reported slower growth and continued layoffs in key business areas, and forecast slower growth in spending through 2023. This difference in growth rates won’t last long. For more than two years, equipment and component suppliers have benefited from a large order backlog accumulated by supply chain bottlenecks and IC shortages. Diversified providers, such as Coherent and Lumentum, probably won’t see a sharp drop in their business. But small businesses selling to the big cloud companies will see a sharp decline in 2023.

*Credo Technology is the first example of many of these types of companies to come. The company issued a statement this week that orders from its major client (supposedly Microsoft) had fallen sharply, and its market valuation was slashed by more than $1 billion (1/3 of its total market capitalization) the next day. Credo will report financial results for the fourth quarter of 2022 on March 1 and expects its revenue to be $31 million, a 40% decline from its record fourth quarter of 2022 of $51 million.

*Cloud services revenue is a very important indicator of future data center equipment and optics demand. The numbers from Google, Amazon, Apple and Microsoft are clear — cloud revenue growth is slowing. CSP also expects capital expenditure (CAPEX) to remain flat to decline in 2023. Coherent and Lumentum, the two major western optical device manufacturers, have both announced their fourth-quarter earnings. Coherent reported organic growth of 23% year-over-year and 4% quarter-over-quarter, with communications segment revenue up 18% year-over-year.

*Lumentum’s revenue increased by 13.3% year-on-year, of which the optical communication segment’s revenue fell by 1% quarter-on-quarter due to the decline in industrial and consumer businesses. Another segment, telecom and datacom, grew 44% year-over-year, driven by telecom. Edge network products grew 40% year-over-year and have become a major part of the company’s telecom business. Lumentum said it continued to be constrained by third-party IC supply shortages, resulting in $60 million in unmet customer demand in the fourth quarter, a slight improvement from the $80 million shortfall it stated in its last earnings call. Almost all equipment makers also reported good results for the fourth quarter of 2022, with their revenues growing by double digits.

* The wireless infrastructure market continues to operate in the equilibrium achieved in 2021: The two opposing spheres of influence, the East led by China and the West defined by the US and its allies, are becoming more balanced. LC found that the West holds 52 percent of the global wireless infrastructure market, while the East accounts for the rest, with China accounting for more than 80 percent of the East.

* LC Principal Analyst, Stephane Teral, said: “Overall, market dynamics continue to be in balance, with the execution of 5G contracts between the second half of 2020 and the first half of 2021 and some smaller new contracts outside India. However, it also means that we have passed the peak of the first 5G wave, which confirms our view that the global wireless infrastructure market is in a state of decline.

• LC: The Global Wireless Infrastructure Market Will Continue to Shrink Slightly in 2023

* LightCounting (LC) Publishes Wireless Infrastructure Market Size, Share and Forecast Q4 2022/2022. While Q4 2022 was the strongest quarter in 2022, driven by 5G deployments in India, growing 11% quarter-over-quarter and down 1% year-on-year, it was not enough to return to growth for the full year. As a result, the global wireless infrastructure market in 2022 will decline by 3% compared to 2021, which means that the market will reach its peak in 2021 after three years of double-digit growth, driven by 5G deployments and continued 4G upgrades. It is worth noting that the mobile 4G and 5G core segments and the open vRAN segment are both strong in the fourth quarter of 2022. In terms of suppliers, Ericsson leads the market share in RAN sales, followed by Huawei, Nokia, Center and Samsung.

* The wireless infrastructure market continues to operate in the equilibrium achieved in 2021: The two opposing spheres of influence, the East led by China and the West defined by the US and its allies, are becoming more balanced. LC found that the West holds 52 percent of the global wireless infrastructure market, while the East accounts for the rest, with China accounting for more than 80 percent of the East.

* LC Principal Analyst, Stephane Teral, said: “Overall, market dynamics continue to be in balance, with the execution of 5G contracts between the second half of 2020 and the first half of 2021 and some smaller new contracts outside India. However, it also means that we have passed the peak of the first 5G wave, which confirms our view that the global wireless infrastructure market is in a state of decline.”

* Therefore, in 2023, we expect the market to decline slightly compared to 2022, and India will be the main driver of 5G. Longer-term, LC’s service provider 20-year wireless infrastructure footprint model analysis shows a CAGR of -3% for this market in 2022-2028, with low-single-digit declines through 2027 and flat in 2028 or a slight increase. In fact, LC expects the 5G segment to grow slightly in 2027, driven by upgrades needed to get ready for 6G networks. Given the 6G activities currently underway, LC expects 6G to be deployed in 2028.

4.2 Synergy Research: The global Public Cloud Market Grew by 21% Against the Wind in 2012

* New data from Synergy Research Group shows that despite tough economic conditions, operators and vendors will generate revenues of $544 billion in key public cloud services and infrastructure markets in 2022, up 21% from 2021. The IaaS and PaaS segments are the fastest growing. Annual revenue from those services rose 29 percent to more than $195 billion, despite headwinds from a stronger dollar and problems in the Chinese market. Among the other major service segments, managed private cloud, enterprise SaaS, and CDN service revenues grew by $229 billion, an average increase of 19% over 2021.

* To support these and other digital services, public cloud providers spend $120 billion to build, lease, and equip their data center infrastructure, an increase of 13% compared to 2021. Across the public cloud ecosystem, the top performers are Microsoft, Amazon, Salesforce and Google. Other major players include Adobe, Alibaba, Cisco, Dell, DigitalRealty, Huawei, IBM, Inspur, Oracle, SAP, and VMware. Together, these companies account for 60% of all public cloud-related revenue.

* While the cloud market is growing strongly in all regions of the world, the U.S. remains a center of gravity. In 2022, the US will account for 45% of all cloud services revenue and 53% of hyperscale data center capacity. In all services and infrastructure markets, the vast majority of major players are US companies, followed by Chinese companies, which account for 8% of total cloud services revenue and 16% of hyperscale data center capacity in 2022.

* Synergy’s total addressable market forecast data shows that public cloud ecosystem revenue is expected to double in just four years. Over the same period, the number of hyperscale data centers operated by major cloud providers is expected to increase by 50%, and data center network capacity will expand by more than 65%.

• Synergy Research: Global Cloud Spending Growth Slows Down in Q422

According to the latest data from Synergy Research Group, global enterprises will spend more than $61 billion on cloud infrastructure services in the fourth quarter of 2022. Although it was an increase of more than $10 billion compared with the fourth quarter of last year, it did reflect a slowdown in the growth rate of the market. As the size of this market grows, a gradual decline in growth rate is expected, but there is no doubt that the current economic environment has also had an adverse effect.

Global enterprise spending on cloud infrastructure services will grow 21% year-over-year in Q4 2022, hampered by a historically strong U.S. dollar and a severely constrained Chinese market. The U.S. market has largely avoided two major hurdles, growing 27% in the fourth quarter, compared with an average growth rate of 31% in the previous four quarters.

Among the largest cloud service providers, Microsoft’s global market share has risen sharply and now stands at 23%, compared with an average share of 21% in the previous four quarters. Meanwhile, market leader Amazon’s market share has long remained in the 32-34% range; Google’s market share of 11% was flat from the previous quarter but up a percentage point from a year ago. Together, the three giants accounted for 66 percent of the global market, up from 63 percent a year ago.

Most of the major cloud service providers have released their earnings data for the fourth quarter. Synergy estimates that revenue from cloud infrastructure services (including IaaS, PaaS and managed private cloud services) for the quarter was $61.6 billion, the largest in the past 12 months. Revenue hit $227 billion. Public IaaS and PaaS services, which account for the bulk of the market, grew 22% in the fourth quarter. The dominance of major cloud service providers is even more pronounced in the public cloud, with the top three controlling 73% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world. Despite the challenging environment, the global market for the full year 2022 will grow by $47 billion from the previous year, almost matching the annual growth of $49 billion in 2021. With an improving economy and stabilizing FX markets, Synergy predicts that the global cloud market will continue to grow strongly in the coming years.

• GSA: 239 Operators in 94 Countries and Regions Have Launched or Soft-launched 5G Mobile Services

* GSA released the latest 5G market data. As of the end of January 2023, GSA has determined that 519 operators in 156 countries and regions around the world are investing in 5G in a way that includes trials, license purchases, planning, network deployment, and commercial use. That figure does not include the nearly 200 companies that received priority access licenses in the U.S. auction of CBRS spectrum, which could be used for 5G. Among the operators investing in 5G, 245 operators in 95 countries and regions have launched or soft-launched at least one 5G service that complies with the 3GPP standard.

* 239 operators in 94 countries and regions have launched or soft-launched 5G mobile services. 104 operators in 56 countries and regions have launched or soft-launched 3GPP-compliant 5G fixed wireless access (FWA) services, accounting for only 42% of operators who have launched 5G services. Nine operators have announced soft launches (or trials) of 5G networks. 113 operators are investing in standalone 5G (5G SA), of which 38 have deployed, launched, or soft-launched standalone 5G services in public networks. The number of 5G devices that have been launched has reached 1,815, an increase of 42% year-on-year; among them, there are 923 models of 5G mobile phones, an increase of more than 50% compared to the end of 2021; the number of commercially available 5G devices has reached 1,447, an increase of more than 49% year-on-year.

4.3 Omdia: The Global PON Equipment Market Will Exceed US $18 Billion in 2007

In 2027, the global PON equipment market is expected to exceed USD 18 billion. Note that current forecasts reflect supply constraints affecting the FTTP market. Consumption in the PON equipment market will grow despite supply constraints; while China’s consumption of PON equipment remains strong, it is no longer the dominant force behind the strong forecast.

* Drivers behind the forecast include:

1. The momentum of FTTH infrastructure construction in most countries is increasing. It is estimated that by 2027, the global FTTH household penetration will exceed 1.2 billion.

2. Increasing bandwidth demand is a key driver of fiber access, along with the need for low latency, reduced jitter and improved quality of experience (QoE). Average household broadband speeds are expected (by the end of the forecast period) to reach 844Mbps, compared to 121Mbps in 2020.

3. Hybrid work and study environments are here to stay.

4. Bandwidth demands are growing across the enterprise, government, and vertical industries including healthcare, banking, transportation, energy and utilities, and manufacturing.

5. Consumers and non-consumers are moving to cloud-based applications. Cloud-based applications require bandwidth, as well as lower latency and jitter.

6. Mobile traffic will reach 3.4 billion terabytes in 2027, compared to just under 600 million terabytes in 2020. Cellular communication requires xHaul transmission, fiber-based access is key, and PON plays a small but important role.

7. Many governments support broadband initiatives, viewing broadband connectivity as a necessary public utility, equating its importance with water and electricity.

•  In 2027, the CAPEX of Global Network Operators Will Reach 646 Billion US Dollars

1. In 2021, the total revenue of global network operators (including the three segments of Telco, Webscale, and Carrier-neutral) will be US$4,121 billion, and it is expected to increase to US$5,755 billion by 2027. At the same time, the capital expenditure (CAPEX) of the three sub-sectors is 536 billion US dollars, which is expected to reach 646 billion US dollars by 2027, with most of the growth coming from Webscale. In 2011, Webscale accounted for less than 10% of total capex, but it has grown to 33.2% by 2021 and is expected to rise to over 41% by 2027. Telco capital intensity will peak at 18% in 2022 and slightly above 16% in 2027. The capital intensity of Webscale averages around 8% over the forecast period, with a big lift coming from Meta/Facebook in the short term. As usual, carrier-neutral has the highest capital intensity, well over 30% throughout the forecast period.

2. The number of employees employed by network operators has grown dramatically over the past decade, from 6.48 million in 2011 to 8.86 million in 2021 and could reach 10.2 million by 2027. Almost all of the growth came from the Webscale segment, with a significant portion of that growth coming from e-commerce companies in Webscale (such as Amazon, Alibaba, and JD.com).

3. Carrier-neutral employees have the highest average earnings and will grow the fastest over the forecast period, as data center-centric CNNO companies account for most of the growth. However, revenue per employee will also grow from $405,000 in 2021 to $492,000 as telcos learn how to do more with less and automate across their entire operations.

3. Concerns about the novel coronavirus (COVID-19) have continued to subside since the second half of 2022. Vaccination rates are high in most countries, new strains are less severe, and deaths and severe illnesses are less common. COVID-19 has clearly had a lasting impact globally, most importantly in loss of life and (hopefully) a wider awareness of the risk of a viral outbreak. It’s unclear whether societies are more willing to invest upfront in preventing outbreaks. COVID-19 has also accelerated trends already underway, promoting virtual work and virtual school, and encouraging businesses to accelerate their digital transformation. This gives cloud providers, including key players in the Webscale segment tracked in the report, the confidence to accelerate their network investments.

4. Telcos haven’t seen the same growth. Many companies did step up their cost-cutting efforts, closing retail stores and starting layoffs. However, Telco margins will only improve slightly in 2021. Meanwhile, the telecommunications industry has rapidly deployed 5G networks across much of the world. Telco capital intensity has been approaching 18% over the past two quarters, despite the vendor’s promise that the upgrade, which is mostly software-focused, will involve less capex than before. That’s even higher than the peak of LTE buildouts.

5. While COVID-19 is not a major factor in business today, it will have a significant impact on China in 2022. The government’s zero-COVID-19 policy has complicated life for residents, causing shutdowns and slowing down manufacturing. This exacerbates supply chain issues in the short term, and in the longer term, it will further drive operators and suppliers to look for alternative supply sources.

• In 2027, the CAPEX of Global Network Operators Will Reach 646 Billion USD

1. In 2021, the total revenue of global network operators (including the three segments of Telco, Webscale, and Carrier-neutral) will be 4,121 billion USD, and it is expected to increase to 5,755 billion USD by 2027. At the same time, the capital expenditure (CAPEX) of the three sub-sectors is 536 billion US dollars, which is expected to reach 646 billion US dollars by 2027, with most of the growth coming from Webscale. In 2011, Webscale accounted for less than 10% of total capex, but it has grown to 33.2% by 2021 and is expected to rise to over 41% by 2027. Telco capital intensity will peak at 18% in 2022 and slightly above 16% in 2027. The capital intensity of Webscale averages around 8% over the forecast period, with a big lift coming from Meta/Facebook in the short term. As usual, carrier-neutral has the highest capital intensity, well over 30% throughout the forecast period.

2. The number of employees employed by network operators has grown dramatically over the past decade, from 6.48 million in 2011 to 8.86 million in 2021, and could reach 10.2 million by 2027. Almost all of the growth came from the Webscale segment, with a significant portion of that growth coming from e-commerce companies in Webscale (such as Amazon, Alibaba, and JD.com).

3. Carrier-neutral employees have the highest average earnings and will grow the fastest over the forecast period, as data center-centric CNNO companies account for most of the growth. However, revenue per employee will also grow from $405,000 in 2021 to $492,000 as telcos learn how to do more with less and automate across their entire operations.

4. Concerns about the novel coronavirus (COVID-19) have continued to subside since the second half of 2022. Vaccination rates are high in most countries, new strains are less severe, and deaths and severe illnesses are less common. COVID-19 has clearly had a lasting impact globally, most importantly in loss of life and (hopefully) a wider awareness of the risk of a viral outbreak. It’s unclear whether societies are more willing to invest upfront in preventing outbreaks. COVID-19 has also accelerated trends already underway, promoting virtual work and virtual school, and encouraging businesses to accelerate their digital transformation. This gives cloud providers, including key players in the Webscale segment tracked in the report, the confidence to accelerate their network investments.

5. Telcos haven’t seen the same growth. Many companies did step up their cost-cutting efforts, closing retail stores and starting layoffs. However, Telco margins will only improve slightly in 2021. Meanwhile, the telecommunications industry has rapidly deployed 5G networks across much of the world. Telco’s capital intensity has been approaching 18% over the past two quarters, despite the vendor’s promise that the upgrade, which is mostly software-focused, will involve less capex than before. That’s even higher than the peak of LTE buildouts.

6. While COVID-19 is not a major factor in business today, it will have a significant impact on China in 2022. The government’s zero-COVID-19 policy has complicated life for residents, causing shutdowns and slowing down manufacturing. This exacerbates supply chain issues in the short term, and in the longer term, it will further drive operators and suppliers to look for alternative supply sources.

• Dell’Oro Market Report

1. Dell’Oro: Mobile Core Market Outside China Returns to Growth in Q422, Growth to Accelerate in 2023

According to a recent report released by Dell’Oro Group, in the fourth quarter of 2022, the mobile core network (Mobile Core Networks, MCN) and multi-access edge computing (Multi-access Edge Computing, MEC) markets, excluding China, resumed growth. Growth in markets outside of China is expected to accelerate in 2023. By the end of 2022, the number of 5G standalone (SA) enhanced mobile broadband (eMBB) networks launched globally will reach 39. Dave Bolan, director of research at Dell’Oro Group, said: “Excluding China, global markets returned to positive year-over-year growth rates in the fourth quarter of 2022 for the first time since the third quarter of 2021. For the full year of 2022, The annual growth rate of this market is negative, but we expect the market outside China to return to a positive year-on-year growth rate from the fourth quarter of 2022, and this trend will continue throughout 2023. In the fourth quarter of 2022, the three mobile network Operators (MNOs) launched 5G SA eMMB networks. These companies include Reliance Jio in India; China Telecom, Macau; Globe Telecom in the Philippines; the total number of MNOs with 5G SA eMBB networks will reach 39 by the end of 2022. We expect large tier-one mobile operators like Reliance Jio, AT&T, T-Mobile, and Verizon to aggressively expand their 5G SA coverage in 2023, driving the market growth. Additionally, we expect several MNOs to launch new 5G SA eMMB networks in 2020 will further drive market growth.” Other highlights of the Q4 2022 Mobile Core Network and Multi-Access Edge Computing report: The top MCN vendors in 2022 are Huawei, Ericsson, Nokia, and ZTE. The top 5G MCN suppliers in 2022 are Huawei, Ericsson, ZTE, and Nokia.

2. Dell’Oro: Massive MIMO Slows in 2022, But More Growth Ahead

Massive MIMO RAN revenue will reach record levels in 2022. At the same time, the market growth rate is slowing down, with only low-single-digit growth in 2022. Looking ahead, Dell’Oro expects that Massive MIMO investment will continue to grow, but global growth is expected to slow down. Dell’Oro expects Massive MIMO revenue to grow nearly 20% by 2024 relative to 2021 levels. A technology originally conceived primarily for use in high-traffic areas, Massive MIMO has come a long way in just a few years, much faster than initially anticipated. The latest analysis from Dell’Oro shows that global Massive MIMO RAN revenue will increase by more than 20 times between 2018 and 2022. According to the analysis, the main reason for the growth of this market is that, compared with low-band and millimeter-wave spectrum, Sub-6GHz Massive MIMO combined with larger mid- and upper-band spectrum provides better coverage, capacity, performance, and Bit energy consumption and TCO trade-off. Global Massive MIMO investment surged from 2018 to 2021; preliminary findings suggest that growth will slow in 2022, partly due to 5G in the upper and middle bands, as well as slower growth in advanced markets such as China, South Korea, and the United States. Dell’Oro believes that Massive MIMO will continue to play a key role in 5G and 5G advanced applications, and the competitive landscape will continue to be fierce. The days of exponential growth are over, but there is still more upside to support TDD MBB expansion in less developed markets, deployment of FDD hotspots, FWA, and TDD product refreshes.

4.4 Dell’Oro: The Service Provider Router Market Will Continue to Grow in the Next Five Years

According to a recent report released by Dell’Oro Group, the service provider (Service Provider, SP) router, and switch market will grow at a compound annual growth rate (CAGR) of 2% from 2022 to 2027. Dell’Oro expects the global SP router and switches market to have cumulative revenue of nearly $77 billion by 2027. Widespread adoption of products based on 400Gbps technology will continue to be a key driver for the growth of this market. Telecom and cloud service providers will continue to invest in network upgrades to meet growing traffic demands and benefit from the economics of 400 Gbps technology. Ivaylo Peev, the senior analyst at Dell’Oro, said: “Our growth forecast remains largely unchanged from our previous forecast. In the first few years of the forecast period, the market was not optimistic as economists expected a recession in Europe and North America. Certainty will remain and macroeconomic conditions will deteriorate. However, on the assumption that the fundamentals of the SP router market remain healthy, we expect the global SP router and switch market to stabilize in the second half of the forecast period.”

• Highlights From the SP Router and Switch Five-Year Forecast Report, January 2023:

1. Built on the latest generation of high-capacity ASICs, routers supporting 400Gbps have higher speed per port and lower power consumption, thereby reducing the total number of ports required, which in turn reduces the size of the chassis. The higher speed per port also reduces the cost per bit per port. Combined with reduced power consumption and a smaller rack-space-saving router format, the transition to 400Gbps ports enables service providers to make more cost-effective investments and reduce operating costs.

2. In the SP core router segment, revenue will grow at a CAGR of 4% from 2022 to 2027, driven by 400Gbps technology adoption.

3. The SP edge router and SP aggregation switch market are expected to grow at a CAGR of 1% to nearly $12 billion by 2027. The main growth driver in this segment will continue to be the expansion of mobile backhaul networks to support the adoption of a 5G radio access network (RAN), followed by increased deployment of residential broadband.

4. It is expected that China’s IP mobile backhaul market will decline, and SP will shift its investment to core and metropolitan area networks, so the demand for SP core router products is expected to increase.

• Dell’Oro Market Report

1. Dell’Oro: Global Data Center Capital Spending Will Reach $400 Billion in 2027

According to a recent report by Dell’Oro, global data center capital spending is expected to reach $400 billion by 2027. A hybrid cloud will bring data center market growth opportunities for hyperscale and enterprise markets. Baron Fung, research director at Dell’Oro Group, said: “While cloud hyperscalers will account for half of the data center infrastructure spending by 2027, there are also significant opportunities in the enterprise market. Enterprises will continue to optimize their IT deployments, balancing multi-cloud and on-premises workloads.” load. New applications will also require edge infrastructure, resulting in new ecosystems. In addition, upcoming advances in new server architectures accelerated computing, and sustainability will improve data center efficiency.” Data Center IT Capex Other highlights from the five-year forecast report: Global data center capital spending is expected to grow 11% through 2027. While upcoming data center architectures will spur long-term growth, macroeconomic factors may hold back near-term data center investment. Edge computing is expected to account for 8% of total data center infrastructure spending by 2027.

2. Dell’Oro: 2023-2027 Global Campus Switch Market Reaches $100 Billion

According to a recent report released by Dell’Oro, in the next five years (2023-2027), the cumulative revenue of the global campus switch market will reach US$100 billion. The market is expected to go through a “digestion period” in 2024, followed by rapid recovery and long-term growth. Sameh Boujelbene, Group Vice President, Dell’Oro, said: “Despite growing concerns about a challenging macroeconomic environment and tough comparisons to the previous year, we expect sales of campus switches to continue growing in 2023 to Record revenue levels at the end of the year. Exceptional levels of backlog and rising prices underpin our optimism for 2023. However, as we move into 2024, we expect the market to undergo a period of correction. We recently added value to some Interviews with resellers (VARs) and system integrators (SIs) revealed that some of their customers have started asking them to suspend product deliveries until they “digest” the equipment on hand. Although there have been some short-term fluctuations in market performance due to supply and demand imbalances, we expect sales to return to long-term growth after a correction period. Our interviews show that fundamental growth drivers remain in place, with digital transformation initiatives driving campus switch market growth for many years to come.” Other Highlights of the Campus Switch Five-Year Forecast Report: 5/5.0 adoption will accelerate, but shipments are expected to account for less than 15% of total campus switch ports by 2027. Power over Ethernet (PoE) ports are expected to account for more than half of total campus switch port shipments by 2027. Despite some short-term headwinds, China’s revenue share is expected to increase by four percentage points over our forecast period. IT/OT convergence is expected to increase over our forecast period, but adoption may take time given the 10-30 year life cycle of industrial networking equipment. The introduction of AI capabilities will continue to play a key role in the competitive positioning of vendors in the market.

3. Dell’Oro Lowers Private Wireless Market Forecast Again

According to a recent forecast report from Dell’Oro, the private wireless networking market is not growing as fast as initially expected. The Dell’Oro Group lowered its forecast again after the last time it slashed its previous forecast to reflect weaker-than-expected progress in field deployments. The main reason for this reduction is the traditional wide-area private wireless sector. On the bright side, private small cell RAN revenue forecasts remain on track to surpass $1 billion in 2027. Stefan Pongratz, vice president of Dell’Oro Group, said: “Even though the latest revenue forecast is lower than expected, our long-term view has not changed, that is, we still firmly believe that the private wireless business is a huge opportunity. It will obviously take some time for the private wireless market to reach its full potential. In fact, our current forecast is that private wireless will reach around 10% of its potential by 2027.” Total private wireless RAN revenue forecast between 2022 and 2027 — Including wide area (traditional and new) and Small Cell — will grow at a compound annual growth rate of 24%. In contrast, public RAN (total RAN minus private RAN) is expected to decline at a CAGR of 2% over the same time period. 5G dominates in China, while LTE currently dominates outside of China – 5G NR is expected to overtake LTE by 2026. Preliminary findings indicate that the largest public RAN vendors, including Huawei, Ericsson, and Nokia, are well-positioned for the initial private LTE/5G development phase. At the same time, enterprises and operators seem more willing to trial non-traditional RAN vendors in some private wireless environments. Risks are roughly balanced. On the bright side, the 5G enterprise conundrum is still not fully resolved. The successful launch of private 5G services and/or the successful launch of new devices from vendors with strong enterprise channels could accelerate enterprise demand for 5G. On the downside, 5G awareness is growing, but it will take a while for businesses to fully understand the value of private LTE/5G. As the competitive landscape for turnkey solutions improves, pricing will need to evolve as well – some price points saw for 3- and 5-year leases risk crushing penetration, especially in the mid-range Wi-Fi category.

4. Dell’Oro: The Global RAN Market Will Perform Worse than Expected in 2022

According to a recent report released by Dell’Oro, preliminary findings show that the growth momentum of the global 2G-5G radio access network (Radio Access Network, RAN) market has slowed down since the fourth quarter of 2021. This momentum has continued into the fourth quarter of 2022, and four of the six regions tracked by Dell’Oro are down year-over-year. Stefan Pongratz, Group Vice President, Dell’Oro, said: “We’ve been talking about a slowdown in growth for some time, and the Q4 results reinforce that. The gap between 5G early adopters and laggards is generally smaller than it was in LTE, but from a global perspective, there are still significant differences in the development of 5G.” Other highlights of the RAN report in the fourth quarter of 2022: The top five global RAN suppliers in 2022 include: Huawei, Ericsson, Nokia, ZTE, and Samsung. The top four RAN suppliers outside of China in 2022 are Ericsson, Nokia, Huawei, and Samsung. Among the top five vendors, Nokia and Samsung had the strongest RAN revenue growth. Dell’Oro has lowered its short-term RAN revenue outlook and expects global RAN revenue to be flat in 2023 compared to 2022, as a surge in investment in India will be offset by declines in North America and China.

Summarize

• In terms of 5G users, the three major operators added 16.567 million new 5G package users in January, a decrease of 10.325 million compared with the previous month. The cumulative number of 5G package users totaled approximately 1.111 billion.

• Juniper, Cisco, and ADTRAN announced their results for the fourth quarter of fiscal 2022, showing year-on-year growth.

• Domestic device manufacturers announced their financial results for 2022. AVIC Optoelectronics, Xinyisheng, Zhongji InnoLight, Fabrinet, Coherent, Lumentum, and other companies all achieved year-on-year growth in revenue. In terms of device manufacturers’ dynamics, Acacia announced the shipment of CIM8, the industry’s first 1.2T pluggable multi-pass module.

• The performance growth of chip manufacturers slowed down. Optical fiber and cable manufacturers Corning and Zhongtian Technology both reported positive growth in performance in 2022.

• MACOM announces that it has entered into a definitive agreement to acquire the assets and business of OMMIC SAS.

• Nokia has launched its sixth-generation Coherent Photonic Services Engine, PSE-6s, which is capable of reducing network power consumption by 60%. In addition to improving energy efficiency, network operators need to add substantial capacity to cope with growing demand. Ciena launched WaveLogic 6, the industry’s first 1.6Tb/s coherent optical solution. Huawei released the industry’s first commercial 50GPON, which effectively supports 10Gbps Everywhere. Hisense Broadband launched the industrial-grade XGS-PON OLT E2 optical module with the highest link budget. Coherent has launched a 1300 nm high-power DFB laser for silicon photonic transceivers.

• LC data shows that in the fourth quarter of 2022, the revenue of almost all device and equipment manufacturers will grow at a double-digit rate. Meanwhile, Internet Content Providers (ICPs) and Communications Service Providers (CSPs) both reported slower growth and continued layoffs in key business areas, and forecast slower growth in spending through 2023. New data from Synergy Research Group shows that despite tough economic conditions, operators and vendors will generate revenues of $544 billion in key public cloud services and infrastructure markets in 2022, up 21% from 2021. According to Omdia data, the global PON equipment market is expected to exceed US$18 billion in 2027. Note that current forecasts reflect supply constraints affecting the FTTP market. Consumption in the PON equipment market will grow despite supply constraints.