Chinese vendors continue to gain share in the global telecoms equipment market

Preliminary numbers from research firm Dell’Oro reveal that, while the kit market grew in 2019, it was driven almost entirely by Chinese vendors.

Dell’Oro’s total telecoms market numbers include the following product types: broadband access, microwave & optical transport, mobile core & radio access network, SP router & CE switch. Its preliminary numbers have the overall market growing by 2% in 2019, which marks its second consecutive year of growth.

The relative revenue shares over the past six years are shown in the table below. The rounded percentages are as follows, with 2018 share in brackets. Huawei 28% (28%); Nokia 16% (17%);  Ericsson 14% (14%); ZTE 10% (8%); and Cisco 7% (8%). So in the past year ZTE’s rebound has been the big story, with Nokia and Cisco losing out. Over the longer term, however, you can see how much share Huawei has taken from Nokia and Ericsson.

The two largest equipment markets in the year were Mobile RAN and Optical Transport, together accounting for about 55% of the overall telecom equipment market. They were also the growth drivers, apparently. 5G RAN seemed to be an especially pleasant surprise, as previously anticipated by Dell’Oro and confirmed by the firm’s recent Q4 2019 RAN numbers.

“While the overall RAN results in the quarter were in line with expectations, 5G wireless RAN activity surprised on the upside, underpinning projections that the rollout of 5G wireless networks is accelerating,” said Stefan Pongratz, VP at Dell’Oro. “This migration from LTE to 5G NR continued to accelerate at a torrid pace throughout 2019. We remain optimistic these trends will extend into 2020, propelling the overall RAN market to advance for a third consecutive year.”

So a crude interpretation of those numbers is that Huawei and ZTE are out-competing Nokia and Ericsson in the RAN market, which is slightly counterintuitive given the restrictions the US has put them under. One possible answer to that riddle could be that the Chinese government obliged its operators to favour domestic suppliers in response.

Healthy growth forecast for RAN market – Dell’Oro

Analyst firm Dell’Oro reckons the renewed growth being experienced by the global radio access network market has a few years left in it yet.

The company has just published its latest RAN market five year forecast and is saying total revenues will be $200 billion over that period. However most of the growth will be in the next year or two, with things slowing after that once everyone has got 5G out of their system. The market is expected to grow by 4% this year, but more like 2% CAGR over the full period.

“Following three consecutive years of declining worldwide RAN revenues between 2015 and 2017, the global upswing that began in the second half of 2018 has become deeper and stronger, reflecting a shift from 4G to 5G that is accelerating at a torrid pace, much faster than anyone expected,” said Stefan Pongratz, Analyst with the Dell’Oro Group.

“We expect these trends to propel the overall RAN market to advance at a healthy pace over the near-term accommodating an intense 5G capex envelop before growth tapers off in the outer part of the forecast period resulting in a flat CAGR between 2019 and 2024.”

As is standard practice with Analyst press releases, most of the juicy, granular data is kept secret in the hope that people will pay for the full report. They did offer the following extra morsels, however: 5G NR RAN investments to surpass $100 Billion, 5G NR small cell market to approach 10 percent to 20 percent of overall 5G NR market. Global macro and small cell transceiver shipments to approach 0.7 Billion. Millimeter Wave 5G NR to account for one sixth of overall small cell investments.