Industry News
400Gbps upgrade in 2023 will drive SP router market
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Author : JIUZHOU
Update time : 2023-01-19 09:23:00
In 2022, the global IP backbone upgrade will drive market demand to shift to 400G routers. The year-on-year growth rate of 400G router port shipments reached triple digits and is expected to maintain the same trend in 2023.
A few days ago, the person in charge of the service provider router and switch research project shared his views on the service provider router market in 2023.
The service provider router market, like other infrastructure segments, is driven and pulled by technological change and the maelstrom of the global macroeconomic environment. Here's what they learned in 2022, and what they expect to see in 2023.
Market Review and Outlook
After returning to growth in 2021, the SP router market will continue to perform strongly in 2022 despite a challenging macroeconomic environment. Worldwide SP router revenue growth of 3% in 2022 is in line with their expectations. Through 2023, they expect growth to continue, albeit at a slightly slower annual rate of 2%. They expect worsening macroeconomic conditions in 2023, so they believe global demand for SP routers will weaken as businesses realign budgets, reduce operating expenses, and shift spending to protect their bottom line.
400Gbps Technology Drives Router Demand
In 2022, they observe a significant shift in market demand towards routers supporting 400Gbps, driven by global IP backbone upgrades. 400Gbps router port shipments are growing at a triple-digit year-over-year growth rate, and they expect this momentum to continue through 2023.
IP backbone/Internet backbone upgrades are driving the highest demand for 400Gbps routers. The Internet backbone includes cloud and telecom SP networks and transports traffic from mobile and broadband service networks as well as cloud infrastructure. They expect that in the next five years, most 400Gbps router ports will be deployed in IP backbone networks.
In 2022, demand for network capacity is rising, spurred by applications such as 5G RAN, IoT, broadband subscription growth, and cloud-based video, music streaming, and gaming platforms. The growth of this market is driven by service providers opting to upgrade their networks to take advantage of 400Gbps technology and expand their networks to meet increasing traffic demands.
5G RAN (Radio Access Network) deployment is driving the rapid expansion of mobile networks with a dual effect. First, mobile service providers need to expand their mobile transport networks, for which 400Gbps routers are being deployed. Second, 5G technology can enable higher mobile Internet connection speeds, which will encourage mobile network users to consume data-intensive media content, thereby driving up traffic on SP networks.
The core router market will see a slight decline in growth in 2022. They believe that SPs delayed the purchase of core routers because they were waiting for the latest ASICs to come to market. They expect growth in the segment to improve in 2023 when some of the top five core router suppliers launch their latest ASICs.
In 2022, the edge router and aggregation switch market will grow strongly due to the increasing adoption of edge routers and line cards based on the latest ASICs that support 400Gbps connections. Continuous investments in 5G RAN by telecom SPs, expansion of mobile transport capacity, and increasing deployment of residential broadband are contributing to the growth of the edge and aggregation switch market. In 2023, they expect slower growth in the segment as they expect a slowdown in mobile backhaul and RAN buildout in China.
China's IP mobile backhaul upgrade slows down
As they predicted, the IP mobile backhaul market outside of China will grow in 2022. According to their preliminary estimates, North America and EMEA will grow by single digits, and Asia Pacific, excluding China, will grow by double digits. The Chinese market will decline slightly in 2022, but still accounts for about one-third of the global market.
The decline in China Mobile's backhaul market expansion in 2022 is due to the slowdown in 5G RAN construction, and the mobile backbone network and IP transmission network of the two largest SPs in China are about to be completed.
By 2023, they expect the decline in China's IP mobile backhaul market to intensify as investment shifts to SP core networks and metro networks. Outside of China, they also expect the mobile backhaul market to grow at a slower rate than in 2022.
A few days ago, the person in charge of the service provider router and switch research project shared his views on the service provider router market in 2023.
The service provider router market, like other infrastructure segments, is driven and pulled by technological change and the maelstrom of the global macroeconomic environment. Here's what they learned in 2022, and what they expect to see in 2023.
Market Review and Outlook
After returning to growth in 2021, the SP router market will continue to perform strongly in 2022 despite a challenging macroeconomic environment. Worldwide SP router revenue growth of 3% in 2022 is in line with their expectations. Through 2023, they expect growth to continue, albeit at a slightly slower annual rate of 2%. They expect worsening macroeconomic conditions in 2023, so they believe global demand for SP routers will weaken as businesses realign budgets, reduce operating expenses, and shift spending to protect their bottom line.
400Gbps Technology Drives Router Demand
In 2022, they observe a significant shift in market demand towards routers supporting 400Gbps, driven by global IP backbone upgrades. 400Gbps router port shipments are growing at a triple-digit year-over-year growth rate, and they expect this momentum to continue through 2023.
IP backbone/Internet backbone upgrades are driving the highest demand for 400Gbps routers. The Internet backbone includes cloud and telecom SP networks and transports traffic from mobile and broadband service networks as well as cloud infrastructure. They expect that in the next five years, most 400Gbps router ports will be deployed in IP backbone networks.
In 2022, demand for network capacity is rising, spurred by applications such as 5G RAN, IoT, broadband subscription growth, and cloud-based video, music streaming, and gaming platforms. The growth of this market is driven by service providers opting to upgrade their networks to take advantage of 400Gbps technology and expand their networks to meet increasing traffic demands.
5G RAN (Radio Access Network) deployment is driving the rapid expansion of mobile networks with a dual effect. First, mobile service providers need to expand their mobile transport networks, for which 400Gbps routers are being deployed. Second, 5G technology can enable higher mobile Internet connection speeds, which will encourage mobile network users to consume data-intensive media content, thereby driving up traffic on SP networks.
The core router market will see a slight decline in growth in 2022. They believe that SPs delayed the purchase of core routers because they were waiting for the latest ASICs to come to market. They expect growth in the segment to improve in 2023 when some of the top five core router suppliers launch their latest ASICs.
In 2022, the edge router and aggregation switch market will grow strongly due to the increasing adoption of edge routers and line cards based on the latest ASICs that support 400Gbps connections. Continuous investments in 5G RAN by telecom SPs, expansion of mobile transport capacity, and increasing deployment of residential broadband are contributing to the growth of the edge and aggregation switch market. In 2023, they expect slower growth in the segment as they expect a slowdown in mobile backhaul and RAN buildout in China.
China's IP mobile backhaul upgrade slows down
As they predicted, the IP mobile backhaul market outside of China will grow in 2022. According to their preliminary estimates, North America and EMEA will grow by single digits, and Asia Pacific, excluding China, will grow by double digits. The Chinese market will decline slightly in 2022, but still accounts for about one-third of the global market.
The decline in China Mobile's backhaul market expansion in 2022 is due to the slowdown in 5G RAN construction, and the mobile backbone network and IP transmission network of the two largest SPs in China are about to be completed.
By 2023, they expect the decline in China's IP mobile backhaul market to intensify as investment shifts to SP core networks and metro networks. Outside of China, they also expect the mobile backhaul market to grow at a slower rate than in 2022.
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