An unchained ZTE helped drive a 15 percent year over year surge in worldwide optical transport wavelength-division multiplexing (WDM) spending during the third quarter, according to a new report from Dell’Oro Group.
The strong quarter was a bounce back from the second quarter in which worldwide optical sales declined 4 percent year over year. That drop was linked to a temporary shutdown at ZTE caused by U.S. sanctions. Those sanctions were eventually lifted in July.
Jimmy Yu, vice president at Dell’Oro Group, explained that the Chinese vendor came back strong following the U.S. ban being lifted. He said that rebound attributed 2 percent to the increase in optical transport equipment revenues compared to the third quarter of 2017. A majority of the segment’s revenue growth was from the Asia-Pacific region where ZTE has a significant presence.
ZTE moved into the No. 3 spot in market revenues, behind leaders Huawei and Ciena, and just ahead of Nokia. The Finnish vendor had temporarily moved in front of ZTE in Q2 revenues.
Specific to North America, optical transport revenues were basically flat. Ciena continued to be the largest vendor in North America, followed by Cisco and Nokia.
One lingering question is what impact Infinera’s recently closed acquisition of Coriant will have on the market. That deal, which closed on Oct. 1, combined two of the larger second-tier vendors into what Dell’Oro predicts will be the world’s No. 5 player.
Infinera had mentioned that some customers – mainly those working with Coriant pre-deal – had paused their spending after the deal was announced. Yu noted that Infinera posted its fifth consecutive quarter of year over year growth in Q3 but when combined with Coriant revenues declined for the quarter.
Overall, Yu said the “market outperformed in the third quarter,” driven by rising demand for coherent wavelengths in metro and long-haul WDM systems. That market specifically saw shipments increase 30 percent year over year.
The report also found that shipments of 100 GB/s (100G) wavelengths continued to rise, growing nearly 15 percent year over year. However higher-speed wavelengths “truly moved the market revenue higher,” Yu added. In fact, the report found that shipments of 200G and faster equipment more than doubled year over year.
Yu said that he expects 100G shipments to continue to grow through the end of 2019, though system revenues will begin to decline. He attributed that to price erosion, strong growth in 200G and faster systems, and the recent launch of new line cards that can support speeds up to 600 Gb/s.