China's optical network system spending slowed down in Q3

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Heidi Adams, senior research director for transport networks at IHS Markit, said that China's spending on optical network equipment slowed in the third quarter of 2016; however, China's optical network system market remains strong.

Although global optical network equipment sales fell 9% sequentially in the second quarter, total spending of $3.2 billion was up 7% from the same period last year.

The sequential decline was partly due to slower sales momentum in the Asia-Pacific region and typical seasonal declines in the Europe, Middle East and Africa (EMEA) region; other reasons included slower sales in the Caribbean and Latin America (CALA) regions.

Adams said sales in China were down more than 19% sequentially.

However, Chinese operators’ spending in the third quarter of 2016 was still 14% higher than in the third quarter of 2015, driven by China Mobile’s leading deployment of 100G infrastructure.

North America was the only region to achieve both sequential and year-over-year growth; long-haul 100G and data center interconnect markets were the driving factors for this growth trend.

Network operators spent $2.9 billion on WDM systems in the third quarter of 2016, down 6% from the previous quarter but up 10% from the previous year.

With a compound annual growth rate (CAGR) of 7% from 2015 to 2020, Adams expects WDM (including ROADM and packet optical transport systems) to drive market growth in the future.

Meanwhile, SONET/SDH technology sales fell 18% year-over-year.

Huawei captured a large market share during the quarter due to its involvement in 100G projects in China and its strength in EMEA and CALA.

Ciena maintained its leadership in the North American market and ranked second globally.

Nokia surpassed ZTE and ranked third in the world, thanks to its leading position in the submarine line terminal equipment (SLTE) market.