Telecommunications equipment sales declined 4% during the first quarter of 2020, according to new research from Dell’Oro Group. Among the top five suppliers, ZTE was the only vendor to gain market share during the quarter. 

Huawei, Nokia, and Cisco each experienced a 1% decline in market share during the quarter and Ericsson held steady compared to full-year sales in 2019. Market leader Huawei dipped from a 29% market share in 2019, to 28% during the quarter, followed by Nokia’s fall from 16% to 15%, Ericsson was flat at 14%, ZTE jumped from 10% to 11%, and finally Cisco slid from 7% to 6%, according to the research firm.

Dell’Oro Group’s global tally of telecommunications infrastructure includes equipment for broadband access, microwave and optical transport, mobile core and radio access network (RAN), service provider routers, and carrier Ethernet switches. It noted that 2020 got off to a weaker start following two years of consecutive growth, but pinned much of that lag on reduced demand for broadband access, routers, switches, and transport.

“While healthy end-user fundamentals and positive 5G momentum outweighed downward risks associated with the COVID-19 pandemic for both RAN and core investments, the pandemic had a more material impact on some of the non-wireless related segments,” Stefan Pongratz, VP at Dell’Oro Group, wrote in the report.

Those impacts included supply chain disruptions and weakened demand attributed to “increased macroeconomic uncertainty,” he explained. 

Revenues for mobile RAN and core grew at a single-digit rate and captured almost half of the entire telecommunications equipment market during the quarter, according to the firm. Meanwhile, combined revenues for broadband access, microwave transport, routers, and carrier Ethernet switches declined more than 10% year-over-year, comprising about one-third of the total market.

“In contrast to previous recessions, the COVID-19 slowdown is shifting and transforming the way we use the network,” Pongratz wrote, adding that a shift in data consumption doesn’t directly correspond to an increase in spending on new infrastructure.

“Some suppliers and service providers indicated that network capacity upgrades were required to accommodate data traffic growth, however, traffic surges did not lead to significant demand for network capacity upgrades across all the telecom equipment segments,” he explained.

Despite the ongoing human and economic toll of the COVID-19 pandemic, Dell’Oro expects market conditions and supply chain risks to improve in the second half of the year. The analysts now predict that the overall telecommunications equipment market will grow 1% in 2020, which is down from its previous prediction of a 2% annual increase in sales.