Blue Globe viewing from space at night with red connections between the cities. (World Map Courtesy of NASA: https://visibleearth.nasa.gov/view.php?id=55167)

Optical transport market to buck economic trends

Sales of optical transport products are set on an upward trajectory despite an unsettled economic outlook and supply chain challenges, according to a recent forecast report by Dell’Oro Group.

The independent analyst firm found that optical transport equipment demand will increase at a 3% compounded annual growth rate (CAGR) for the next five years, reaching $17 billion by 2027. The cumulative revenue during that five-year period is expected to be $81 billion.

“We expect annual growth rates to fluctuate in the near term before stabilizing to a more typical 3% growth rate,” said Jimmy Yu, Vice President at Dell’Oro Group. “There is still a large amount of market uncertainty this year due to the economic backdrop—economists are predicting a high chance of a recession in North America and Europe. However, at the same time, most optical systems equipment manufacturers are reporting record levels of order backlog entering the year, and we expect that most of this backlog could convert to revenue when component supply improves this year.”

Yu’s report said that WDM Metro market growth rates in next five years are projected to be lower than historic averages due to the growing use of IP-over-DWDM. The DWDM long haul market is forecast to grow at a five-year CAGR of 5%, while coherent wavelength shipments on WDM systems are forecast to grow at 11%, reaching 1.2 million annual shipments by 2027. Installation of 400 Gbps wavelengths expected to dominate for most of the forecast period.

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