Equipment revenue surged in Q1, hiking hopes for '21: Dell'Oro

Research firm Dell’Oro Group is revising its revenue growth expectations for the telecom equipment market for this year after finding that first quarter 2021 revenue from across multiple segments grew 15% compared t0 the same quarter last year.

The overall telecom equipment market--including broadband access; microwave and optical transport; mobile core and radio access network; and service provider router and switch segments surged during the first quarter due to a variety of factors, Dell’Oro said. These included positive activity in multiple segments and regions to open 2021, a weaker U.S.dollar during the first quarter and comparatively low figures from early 2020, when international supply chains began to buckle amid early-stage pandemic restrictions. 

The strength of early 2021 has convinced Dell-Oro Group to revise its expectations for the rest of the year. The research firm now believes collective revenue across all market segments will increase in the range of 5% to 10% for the year, up from the group’s previous expectation for 3% to 5% revenue growth for 2021. This would mark the continuation of a market growth trend that has stretched from 2018 through 2019 and even through the troubles of 2020 into this year.

While early data is spiking hopes, there was also a note of caution in Dell’Oro’s outlook: “At a high level, the suppliers did not report any material impact from the ongoing supply chain shortages in the first quarter,” the firm stated in a blog post. “At the same time, multiple vendors did indicate that the visibility going into the second half is more limited.”

The market growth of the first quarter has not translated to any major market share shifts among vendors. The top seven vendors comprised around ~80% of the total market, with Huawei continuing to lead global market share. Ericsson, in third place did appear to draw even with second-place Nokia after several years of the two growing closer in revenue share. Also, Samsung nudged slightly ahead of Ciena during the quarter to become the No. 6 supplier in the market.

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Regionally, North America and Asia-Pacific each propelled revenue increases of more than 15%. In North America in particular double-digit growth was seen in revenue from sales of broadband access gear, RAN equipment and service provider routers and switches. 

In the broadband access arena, Dell’Oro recently said the market for 10G PON equipment boomed during the first quarter. Meanwhile, upgrades from 4G to 5G drove not just RAN purchases, but also increased investment in core and transport networks supporting 5G, Dell’Oro said.