Global RAN market posts surprising slowdown in Q2, Dell'Oro finds

Research and consulting firm Dell'Oro Group said it recorded an unexpected slowdown in the global market for the radio access network (RAN) equipment that underpins the world's 4G and 5G industry.

That could spell trouble for vendors, ranging from huge, global suppliers like Samsung, Nokia and Ericsson to smaller upstarts such as Japan's NEC and CommScope in the US.

"The shift in the pendulum is not a surprise, but admittedly it has swung a bit faster toward the negative than initially expected," analyst Stefan Pongratz, a VP at Dell'Oro, said in a statement. "Slower momentum is not a sign that the 5G deployment phase is over. The message we have communicated for some time now, namely that the 5G cycle will be longer than previous technology cycles, still holds. At the same time, market conditions in the quarter were impacted by APAC [Asia-Pacific], excluding China, Russia and foreign exchange."

Dell'Oro did not provide firm numbers in its release, but reported that the 2G-5G RAN infrastructure equipment market – which includes hardware and software sales – recorded its first year-over-year contraction in revenues in more than two years. The firm said it was the third consecutive quarter in which vendors collectively reported results below its expectations.

Figure 1: (Source: Wang Quanchao/Xinhua/Alamy Live News)

"Although the RAN market is not immune to external risks, initial readings suggest that the RAN impact from deteriorating macro conditions, high levels of inflation, and supply chain disruptions were limited in the quarter," the firm explained in its release.

Although Dell'Oro did not provide detailed market share statistics, it offered insights into the performance of some of the world's biggest vendors. Ericsson, for example, was the largest outside China, accounting for 39% of global RAN revenues in the first half of 2022. Nokia, meantime, managed to grow its own share outside China during the first half of 2022.

Those findings are not necessarily a surprise. Ericsson in the second quarter reported a 13% jump in net sales compared with the year-earlier period. Nokia reported an 11% increase in net sales during the same period.

Meanwhile, China's Huawei, which has long been the world's biggest supplier of RAN equipment, posted revenues in the first half of 2022 that were down 5.9% from last year, its lowest such results in five years. Huawei continues to suffer under strict US sanctions amid a widening global regulatory opposition to its products.

But an overall slowdown in demand for RAN products could affect virtually all the world's vendors, if it indicates slowing interest in new wireless equipment among global network operators. In the US, for example, operators continue to race to construct speedy 5G networks in their new midband spectrum holdings, but they have struggled to eke out more profits from those networks. So far fixed wireless access has emerged as the first big 5G use case in the US.

Related posts:

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano