According to a new report from market research firm Dell'Oro Group, the optical transport equipment market declined 18% year-over-year in the third quarter of 2024 due to reduced global demand. All major geographic regions showed year-over-year declines in revenue contribution.

“Demand for optical transport equipment is significantly lower.” Jimmy Yu, vice president, Dell'Oro Group, said. “While customer inventory adjustments continue to be a contributing factor to the decline in optical equipment sales, we believe that unfavorable macroeconomic conditions are having a greater impact on current market performance. This is best illustrated by market contraction in key geographic regions where customer inventory levels have not improved, such as Europe and China. ”

Other highlights of this Q3 2024 quarterly report on the optical transport market include:
Most regions experienced declines of more than 20% in the quarter, with India and China experiencing the largest declines. The Indian market saw a 40% decline in revenue and the Chinese market saw a 30% decline in revenue.

Customer inventory adjustments, which began in the fourth quarter of 2023, are almost substantially complete. Vendor comments indicate that order flow is increasing and optical equipment revenues are improving in North America, where most of the excess inventory buildup is occurring.

The Top 3 suppliers for the first three quarters of 2024 were Huawei, Ciena and ZTE. Huawei experienced the largest market share gain among all suppliers during this period, increasing its market share by an estimated four percentage points. In second place for share gains was ZTE.

Dell'Oro Group forecasts that the optical transport market will return to growth in 2025, once the customer inventory adjustment phase ends at the end of 2024 and global economic conditions begin to improve in early 2025.