Dell’Oro predicts 3% CAGR growth for optical transport market

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Dell’Oro Group has released its Optical Transport 5-Year January 2023 Forecast Report.

According to the report’s findings, demand for optical transport equipment demand is likely to increase at a 3% compounded annual growth rate (CAGR) for the next five years, reaching $17bn by 2027. The cumulative revenue during that five year period is expected to be $81bn.

Amongst the report’s other highlights, it details how the market is expected to increase in 2023 due to improving component supply. Meanwhile, the WDM metro market growth rates in the next five years are projected to be lower than historic averages due to the growing use of IP-over-DWDM. 

The report additionally predicts that the DWDM long haul market is forecast to grow at a five-year CAGR of 5%, with coherent wavelength shipments on WDM systems forecast to grow at 11% CAGR, reaching 1.2 million annual shipments by 2027. Dell’Oro also expects that installation of 400Gb/s wavelengths will dominate for most of the forecast period.

Jimmy Yu, Vice President at Dell’Oro Group states: “We expect annual growth rates to fluctuate in the near term before stabilising to a more typical 3% growth rate. 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.”

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