This article is more than 1 year old

Wireless kit hit by supply chain woes in Q1, China lockdowns blamed

Backlogs reportedly 10 to 15 times greater than they were pre-pandemic

The Wireless LAN market was battered by a choppy supply chain in the first quarter of 2022 and lockdowns in China are compounding the problem, according to analysis by Dell'Oro Group.

Many organizations have scheduled network upgrades, but supply is not able to keep pace with demand and backlogs are reportedly 10 to 15 times greater than they were pre-pandemic.

Several manufacturers have cited components from second and third-tier suppliers as the cause of the bottleneck, Dell'Oro said, which means that the problem may not be a shortage of Wi-Fi silicon, but rather of secondary components that are nevertheless necessary to make a complete product.

"Second and third tier suppliers make up a smaller portion of components to the overall system. Meaning the manufacturer of wireless access points might have the main pieces such as the wireless semiconductor, but might be missing some nit-little-part, but without the nit-little part, the access point won’t operate," Dell'Oro founder and CEO Tam Dell'Oro told The Register.

Volatility in the supply chain is also an issue, Dell'Oro said, with the situation varying from vendor to vendor depending on whether they can obtain the specific parts they need. In November, Arista and Juniper were quoted up to 80 weeks on certain components, though this was not specific only to wireless LAN.

Some vendors may see shipments of certain ranges rise 20 percent in one quarter and fall 20 percent or more in the next, meaning they are "on a rollercoaster ride — a very difficult situation to navigate," said Dell'Oro.

Component issues

Dell'Oro gets its data from various sources such as that published by the manufacturers when financial results are announced. Comparing this data with numbers drawn from surveys on sales of Ethernet switches and wireless LAN equipment, Dell'Oro said it was able to deduce that wireless LAN has been hit harder by component supplies.

Citing some specific examples, Dell'Oro said Cisco stated during its May earnings call that it had 11,000 PCBs built waiting to ship, but they needed power supplies, which are sourced from China, and these were delayed because of Covid lockdowns.

Chuck Robbins, Cisco CEO said at the time: "When we look at Q4 [of our fiscal 2022] and you think about the Shanghai lockdown and what we've heard, because in Shanghai there are lots of components that go into our power supplies, we're not able to get those components. Shanghai now is saying they're going to open up June 1."

The lockdown in China's largest city will hurt Cisco's sales by between $131 million and $720 million in revenues for it's Q4, which ends in August.

Backlogs rise from $30 million to $425 million

Another example is Extreme Networks, which saw its product backlog increase to $425 million, which compares with a backlog in the region of $30 million to $35 million before the supply chain issues started. Execs said revenues in calendar Q2 would likely be "a low water mark" on its overall revenue outlook, blaming lockdowns in China.

Dell'Oro also noted that sales of Wi-Fi 6E accelerated during the first quarter as more manufacturers launched products, but warned adoption of the technology appears to be currently "tracking below the rates of the previous two technologies, Wi-Fi 6 and Wi-Fi 5 Wave 2."

The company had previously forecast that supply chain issues might lead organizations to miss deploying Wi-Fi 6E network kit and instead wait for the availability of the next generation of Wi-Fi 7 products, by which time it is hoped that the supply chain problems may have been resolved.

This forecast was disputed by the Wi-Fi Alliance, the non-profit organization that owns the Wi-Fi trademark and counts the Wi-Fi vendors among its membership. ®

More about


Send us news

Other stories you might like