One year later than expected! The global microwave transmission market is expected to enter a multi-year growth period in 2021

Recently, Jimmy Yu, vice president and analyst at market research firm Dell'Oro Group, predicted in a blog post the development trend of the global microwave transmission market in 2021. He pointed out that the multi-year growth of the microwave transmission market originally predicted to start in 2020 has changed due to the epidemic, but this growth is expected to resume in 2021. However, the market still faces great uncertainty.

The following is a compilation of the main content of this blog post:

I had expected the microwave transmission market to enter a multi-year growth phase starting in 2020, driven by 5G deployments. However, the market is expected to decline by 5% this year as precautionary measures to reduce the spread of the COVID-19 pandemic slowed the launch of 5G networks in some countries and made it increasingly difficult to deliver and install microwave equipment in many other countries. However, in the third quarter of 2020, when many countries lifted lockdowns or relaxed travel restrictions, demand for microwave transmission equipment increased by 7% year-on-year, making up for some of the market revenue lost in the first half of 2020. We believe this positive momentum will continue for the rest of the year and into next year. So, while the beginning of 2020 was painful and the middle of the year was difficult, the end of 2020 brings some hope for a better 2021.

Of course, there will be some headwinds in 2021 - the biggest being renewed lockdowns to control the pandemic and a slow economic recovery, both of which will have a negative impact on mobile operators' revenues and confidence in investing capital in equipment.

That being said, we believe that the COVID-19 pandemic has made the world realize the importance of connectivity. Both fixed and mobile broadband will require "more" - more connections and more bandwidth. Therefore, while the COVID-19 pandemic may cause delays in the deployment of new 5G networks in 2020, we believe that there should be no more delays in 2021 as 5G is a key technology for the future.

As a result, we forecast that the microwave transmission market will return to growth in 2021 (a year later than our initial forecast). We believe that preparations for the installation of 5G and 5G mobile base station equipment will lead to growing demand for microwave equipment in 2021, and we expect this market to grow by a low single-digit percentage. Furthermore, we believe this is just the beginning of a multi-year growth cycle.

As 5G will require more backhaul capacity, we expect demand for E-band microwave systems (capable of supporting up to 20Gbps transmission) to accelerate, increasing by more than 30% next year. While E-band sales have been growing for several years, driven primarily by its use in Eastern European countries, we believe that industry interest and deployments in the E-band will expand geographically to many other regions around the world next year.

At the same time, we believe that multi-band systems and links that combine the E-band with at least one carrier frequency below 30GHz will become increasingly important. The demand for multi-band systems that use a mix of mmWave and lower-band microwave frequencies has already begun in 2020, but we believe this demand will expand in 2021 as 5G backhaul is deployed. This solution not only provides more capacity per link, but also improves link resiliency and performance within the same outdoor footprint (keeping tower leasing costs constant). As a result, we believe that the adoption of multi-band links will become more mainstream and no longer just a niche market in the coming year.

Although we are optimistic about the outlook for 2021, we do think the market will be more volatile. This is not to say that demand for microwave transmission equipment will fluctuate up and down from quarter to quarter (although that is possible), but rather that the level of uncertainty in 2021 will remain high. And, although we are hopeful that the worst of the pandemic is behind us and that a COVID-19 vaccine will be widely available next year, it is still difficult to be certain about what will happen because when it comes to this pandemic (the first I have encountered since I started doing market research), we simply don’t know what is certain.