OPTICAL TRANSPORT
TRANSPORT INTO THE FUTURE
An analyst review of optical transport developments in 2022 and a forecast of what to expect in 2023
JIMMY YU
A
s an industry analyst who has covered the optical transport market for more than 20 years, I can say that 2022 was a
truly unprecedented year. I cannot recall any other time when everything
seemingly happened, all at once, influencing the market at every point. In this one year, there was a pandemic with city-wide Covid lockdowns in China, war in Ukraine with economic sanctions placed on Russia, rampant inflation with spiking fuel prices, global economic slowdown, and component shortages. It was, by all measures, a difficult period in time. Under normal circumstances, due to these
external pressures, the optical transport market would sharply decline (the market declined 10% in the last global recession). However, the optical transport market size was relatively unchanged in the first half of 2022 from the year before. Tis is no small triumph, considering that we report the market results in US dollars (USD) and
22
foreign currency exchange rates plummeted. For example, the euro-to-USD exchange rate declined approximately 9% in that time period, and in the third quarter of 2022, the euro and USD reached parity, something that last occurred two decades ago. In other words, in constant currency, the optical transport market actually grew year-on-year.
Exceeds expectations As a result of the weaker euro currency, economic sanctions on Russia, and spiking costs of fuel (natural gas and petroleum), the European market for optical transport equipment was expected to be lower on a USD basis in 2022. In another part of the world, a zero-Covid policy has caused city-wide lockdowns, causing the market demand for optical equipment to slow in China. In the first half of the year, the Chinese optical market contracted
6% and was on course for a full-year decline. Tis all said, we are predicting that the optical
transport market will slightly increase in 2022 by 1-3%, depending on component supply. One of the reasons for this positive outlook is the increasing demand in North America. Due to the uncertainty about the pandemic’s impact on the economy and businesses, most North American service providers held off on planned capacity additions and starting new
“
For now, we believe the optical transport market will continue to grow in 2023”
Fibre Yearbook 2023
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