The $15 billion optical transport equipment market declined 2% in 2021 due to market conditions in the APAC region. However, the market experienced an uptick in North America, Europe and Latin America, according to a recent Dell'Oro Group report.

5G investment, cloud service growth and demand for "infotainment-at-home" are among the drivers increasing demand in the optical networking market, according to a 2021 report by research group Omdia.

Optical transport revenue in APAC fell 11% due to lower sales in the region in 2021, according to Dell'Oro. China, which provides two-thirds of the area's revenue, experienced a decline of 9%.

"The Optical Transport market outside of Asia Pacific improved in the year, following a momentary slow down caused by the pandemic in 2020," said Jimmy Yu, VP at Dell'Oro, in a statement. "It was a noticeably strong year for optical systems in all the other regions."

In North America, Europe and Latin America, optical transport revenue increased 12%, 6% and 19%, respectively. In those regions, optical revenue in 2021 exceeded the pre-pandemic levels, said Yu.

"The biggest issue facing the industry is the ongoing component shortage and supply-chain bottlenecks. Without these issues, the optical market would have grown at a much higher rate," he explained.

Outside of APAC, the top equipment manufacturers by revenue for the optical transport equipment market were Ciena, Huawei, Nokia, Infinera and Cisco, with a combined share of over 80%.

Dell'Oro predicts the optical transport equipment market will grow at a 3% CAGR to $18 billion by 2026 due to market growth from sales of DWDM systems that deliver wavelength speeds over 200 Gbit/s. Coherent wavelength shipments on DWDM systems are predicted to increase at a 12% CAGR. However, demand for IPoDWDM technology will likely lower the overall demand for DWDM systems, said Dell'Oro.

In addition, the ZR optics market, which includes 400ZR and 800ZR, is forecast to exceed $600 million by 2026.

— Kelsey Kusterer Ziser, Senior Editor, Light Reading