North American telecommunications equipment expenditure suffered an unanticipated drop in the first half of this year, new findings illustrate. All over the world, telecoms hardware revenues held firm at the same level as the previous year for the second quarter of 2023, and witnessed a modest 2% boost in the initial half of the year, as reported by Dell’Oro. The notable deviation found was North America, which saw a marked decline in telecoms equipment revenues during the first half of 2023.
While Dell’Oro did not disclose specific numbers, their data suggests a possible sharp descent into double-digit percentage territory for North American telecom equipment revenues. This negative movement unavoidably impacted the overall global figure. “[I]n stark contrast however, the overseas market remains robust,” Dell’Oro highlighted, with a clear growth of 7% in global revenues for telecoms equipment in the first half of the year. Foremost among these expansion areas was the Asia-Pacific, with other regions also reporting stability.
The severity of the North American downturn came somewhat as a surprise. “The pendulum swung toward the negative in the first half,” Dell’Oro stated. “The slump in North America was projected but the pace of the contraction exceeded expectations.”
Several factors played a role in this downturn. It was anticipated that slowing expenditure on 5G would be a major factor, given the statements of U.S. mobile operators Verizon and T-Mobile US. Both firms had previously announced they were past the peak of 5G capex at the inception of the year, whereas AT&T indicated they were not quite there yet. Dell’Oro’s report also pointed to inventory corrections influencing certain technology sectors in North America. A further contributing factor was the reduced spending on broadband access equipment in the North American region, which amounted to the lowest level witnessed in nearly two years during Q2.
Changes in the mix of technology for overall telecom equipment revenues can also be attributed to North America. Global RAN revenues are on the decline, reaching the greatest drop in nearly seven years in Q2. On the other hand, other industry segments are maintaining growth with wireline now performing better than wireless. This balanced combination of positive trends is “more than enough to offset the more challenging conditions in RAN,” as per Dell’Oro’s statement.
Minimal changes in vendor market shares over time were also analyzed by Dell’Oro. Despite efforts in the US to constrict its market reach and access to core technologies, Huawei still unquestionably leads. Outside of North America, the Chinese provider accounted for approximately 35-40% of global revenues in H1. Following Huawei, Nokia solidified its position in second place, while Ericsson trails further in third position, owing largely to technology mix changes. A point of added interest is the fact that Ciena overtook Samsung to reach the sixth spot.
As for future anticipations, Dell’Oro does not foresee any significant market alterations. Worldwide equipment revenues are expected to remain unvaried this year. While this conjecture may appear lackluster, past experience with the dynamic international telecommunication industry suggests that changes are almost inevitable.
