Industry News
3Q24 global optical hardware spending down?
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Author : JIUZHOU
Update time : 2025-01-17 09:45:58
Global optical hardware spending fell 17% year-on-year in the third quarter of 2024. Spending has slowed down as service providers cut back on extra inventory. Meanwhile, spending on hardware by hyperscale operators has increased for five straight quarters.
The wavelength division multiplexing hardware market is changing. Spending is moving from traditional systems to pluggable coherent modules.
The 2024 third quarter report from a research company shows that global spending on optical hardware dropped 17% compared to last year. The decline was due to weakening spending as service providers continued to reduce excess inventory. However, spending by hyperscale data center operators has grown for five consecutive quarters.
The chief analyst of a research company on the optical communications market said,
"The optical transport industry has many growth challenges. However, the rise in cloud spending offers a big chance for the market."
"Network operators are moving money from old metro optical transport systems to new 400ZR-based IP-over-DWDM solutions. This change is disrupting past spending habits."
"This technology is key for linking large data centers to expensive AI data centers."
Other findings from the third quarter 2024 transport hardware report:
- Trends in long-haul and metro spending: Spending in long-haul and metro sectors is becoming more different. This change is influenced by IP-over-DWDM technology. For the third quarter in a row, long-haul hardware revenue has surpassed metro spending.
- Optical hardware revenue in North America remained relatively stable. Inventory levels returned to normal, and cloud computing spending kept increasing. Nevertheless, sales in routing have dropped to their lowest point since 2020.
-Recovery in the telecom hardware supply chain is happening. Component manufacturers are seeing better results. They say the recent downturn is turning around.
Some of these gains come from the growth of 400ZR pluggable module sales. This growth is not included in optical hardware revenue.
The wavelength division multiplexing hardware market is changing. Spending is moving from traditional systems to pluggable coherent modules.
The 2024 third quarter report from a research company shows that global spending on optical hardware dropped 17% compared to last year. The decline was due to weakening spending as service providers continued to reduce excess inventory. However, spending by hyperscale data center operators has grown for five consecutive quarters.
The chief analyst of a research company on the optical communications market said,
"The optical transport industry has many growth challenges. However, the rise in cloud spending offers a big chance for the market."
"Network operators are moving money from old metro optical transport systems to new 400ZR-based IP-over-DWDM solutions. This change is disrupting past spending habits."
"This technology is key for linking large data centers to expensive AI data centers."
Other findings from the third quarter 2024 transport hardware report:
- Trends in long-haul and metro spending: Spending in long-haul and metro sectors is becoming more different. This change is influenced by IP-over-DWDM technology. For the third quarter in a row, long-haul hardware revenue has surpassed metro spending.
- Optical hardware revenue in North America remained relatively stable. Inventory levels returned to normal, and cloud computing spending kept increasing. Nevertheless, sales in routing have dropped to their lowest point since 2020.
-Recovery in the telecom hardware supply chain is happening. Component manufacturers are seeing better results. They say the recent downturn is turning around.
Some of these gains come from the growth of 400ZR pluggable module sales. This growth is not included in optical hardware revenue.
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