Telecom equipment revenues advanced globally by 4% in the first half of the year, despite the impact of the pandemic.
That positive trend is expected to continue through the end of the year, leading to a 5% advance for the entire year, according to analysts at Dell’Oro Group on Monday.
Rollouts of 5G wireless, especially in China, were a primary cause of the first half increases, which benefit the entire supply chain, including communications semiconductors. According to the Semiconductor Industry Association, about 33% of all semiconductors made (the largest category) are devoted to communications, including networking equipment and radios in smartphones.
Handset communications chips are not included in the Dell’Oro tally of telecom equipment, however.
In the first half of 2020, double digit growth in mobile infrastructure offset declining investments in broadband access, microwave and optical transport and service provider routers and ethernet switches, Dell’Oro said. Statista analysts in June said 2020 telecom equipment revenues should nearly reach $50 billion.
Rankings of the biggest telecom equipment providers remained the same in the first half of 2020, with Huawei of China dominating at 31%, followed by Nokia and Ericsson tied at 14% each, then ZTE at 11% and Cisco at 6%, according to Dell’Oro.
Second quarter results were stronger than expected following a 4% decline in the first quarter. The biggest driver was a strong rebound in China across 5G Radio Access Network, 5G Core and other areas. Supply chain disruptions of the first quarter also stabilized in the second quarter, Dell’Oro said.
“Even though the pandemic is still inflicting high human and economic losses, the Dell’Oro analyst team believes the more upbeat trends in the second quarter will extend to the second half propelling the overall telecom equipment market to advanced 5% in 2020,” wrote Dell’Oro analyst Stefan Pongratz in a report.
Semiconductor officials are less optimistic for the rest of the year with SIA President John Neuffer recent saying “substantial market uncertainty remains for the rest of the year.” Semiconductor sales were up 5% in July, reaching $35 billion, but dropped in early August, according to reports.