Huawei, Cisco and Ciena were the only three telecommunications equipment vendors to grow their market share last year, which is more impressive as the overall market was down 5%, driven by a dramatic decline in North America.

Dell’Oro Group reported that Huawei controlled 30% of telecommunication equipment revenues in 2023. This includes broadband access, microwave and optical transport, mobile core network and radio access network (RAN) equipment, and service provider routers and switches.

Huawei’s market share was actually up from the 28% it held in 2022, despite ongoing pressure from Western governments forbidding the use of equipment from China-based vendors due to security concerns.

“In fact, our assessment is that Huawei’s lead widened in 2023, in part because its limited exposure to the North America region was a benefit in 2023 on a relative basis,” Dell’Oro Group VP Stefan Pongratz wrote.

Huawei’s management expressed a similar sentiment, with rotating chairman Ken Hu stating the vendor “weathered the storm” of 2023 and is “pretty much back on track” as it enters 2024. Hu noted that the vendor witnessed a roughly 10% year-over-year increase in overall company revenues for 2023, boosted by a device business that “surpassed expectations,” and solid results from its information and communications technology (ICT) operations.

Nokia and Ericsson remained neck-and-neck for the final podium placings.

Nokia again managed to squeeze out a slight margin over its Nordic rival in 2023, snaring 15% market share compared with Ericsson’s 13% share. That slim lead was slightly more than in 2022, when Nokia also had 15% of the market compared with Ericsson’s 14% share.

China-based vendor ZTE maintained its 11% market share in 2023, which was a considerable buffer over No. 5 Cisco, which did manage to grow its share from 5% in 2022, to 6% last year. Combined, the market’s top seven vendors controlled 80% of the telecommunications equipment revenues in 2023.

Ciena, which held 4% of the market, and Samsung at 2% of the market were the only other named vendors listed by Dell’Oro Group. Huawei, Cisco and Ciena were notable for being the only vendors named that actually grew their telecom market share last year.

Telecom market slowdown expected to continue

That market share growth is more significant as the overall telecommunications equipment market dropped 5% last year, “performing worse than expected,” according to Pongratz.

That drop was headed by North America, which Dell’Oro Group found slowed by around 20% last year. Pongratz tied that regional anomaly to “weak activity in both RAN and broadband access.”

“On the bright side, regional dynamics were more favorable outside of the U.S.,” Pongratz added. “Our assessment is that worldwide revenues excluding North America advanced in 2023, as positive developments in the Asia-Pacific region were mostly sufficient to offset weaker growth across Europe.”

The Dell’Oro Group report also noted the ongoing slow roll of 5G standalone (SA) deployments that are hindering deeper telecom investments. A recent report from Pongratz’s colleague Dave Bolan noted that only 12 new 5G SA cores were deployed in 2023, compared to 18 in 2022. Counterpoint Research came to a similar conclusion, noting that 55 operators worldwide had an operational commercial 5G SA core at the end of last year.

A 5G SA core, which consists of the user plane, control plane and shared data layer network functions, allows operators to deliver a more resilient core network. It also supports highly touted 5G services like network slicing, automation, orchestration and multi-access edge computing (MEC).

This compares to a 5G non-standalone (NSA) core that relies on an operator’s legacy 4G LTE core for base processing and routing.

Jonathan Davidson, EVP and GM for Cisco Networking, explained during a “tech talk” at the recent MWC Barcelona 2024 event that the lull in telecom spending has been compounded by operators in less advanced countries waiting longer than expected to make their 5G deployment plans.

“We would have expected them to start making 5G decisions because if you make decisions now, those rollouts would happen a couple of years from now, and we’re not seeing the pace of those decisions happening,” Davidson said, adding that this is likely due to lingering 5G monetization concerns.

“There’s definitely more work to do there,” Davidson said. “We have seen a lot of people who have invested early in 5G looking for ways to monetize any of their assets that they have deployed.”

Dell’Oro Group’s Pongratz concluded that the telecom market will likely remained challenged in 2024, though to a lesser degree than in 2023, with current forecasts of the market at best being flat year over year.