In the fiscal year 2024, the total demand for telecom equipment is predicted to be around JPY 3.92 trillion, which is a 2.1% increase compared to the previous year.
This represents a turnaround from the 6.8% decline seen in FY2023, according to forecasts from the Communications and Information Network Association of Japan (CIAJ).
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Overall Market Outlook
The domestic market is expected to yield approximately JPY 3.65 trillion (up 1.7% from FY2023), while exports are forecasted to yield JPY 261.1 billion (up 7.9% from FY2023). Despite some overseas telecom carriers holding back on investments in certain equipment categories, the end of the semiconductor shortage is projected to lead to overall growth in exports.
The total market value for telecom equipment is anticipated to reach approximately JPY 4.24 trillion in FY2029, representing a 10.5% increase from FY2023. However, Japanese brands in the telecommunications equipment sector are losing market share to foreign brands, with no clear end to the decline in sales and profits in sight.
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Enterprise/ Handset Outlook
The CIAJ predicts that mobile handsets will reach JPY 2.5 trillion in FY24 (a 1.9% increase YoY), despite a decrease in handset shipments due to a weaker yen and higher component prices leading to higher prices that may deter consumers from making new purchases. Enterprise equipment is expected to remain steady at JPY 424.8 billion in FY24 (a 0.1% increase YoY). Demand for digital transmission equipment and base stations in the domestic market is forecast to remain stable after a peak in capital investment, particularly in 5G, by telecom carriers in FY2022.
Starting in FY2026, demand for 5G handsets is expected to grow steadily. This growth is driven by the adoption of 5G Standalone (SA) networks, which enable multiple devices to connect simultaneously with minimal latency, and the introduction of innovative 5G services into the market. Demand for terrestrial fixed communication equipment is expected to rise due to its use in 5G radio backhaul and fronthaul, while demand for satellite fixed communication equipment is projected to increase in the public sector.
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Terrestrial Outlook
As the industry recovers from the semiconductor shortage, there is a consequent increased demand for terrestrial fixed communication equipment specifically for disaster-related emergency systems in the public sector. Positive growth is also anticipated for satellite fixed communication equipment.
Investment in high-speed networks slowed during and after Covid-19, leading to a lower demand for optical access equipment. Capital spending in routers is expected to increase to accommodate growing data traffic as telecom carriers expand into the cloud and data services sectors. LAN switches and SOHO (small office/home office) products are likely to contribute to a slight 0.2% YoY increase in the overall internet equipment category (approximately JPY 326.5 billion).
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