Report: Wireless LAN backlogs have piled up to 10x normal levels

Aug. 12, 2022
According to new research by Dell’Oro Group, wireless manufacturers remain limited by supply, leaving many enterprises scrambling to find creative Wi-Fi solutions.

According to a recently published report from Dell’Oro Group, the overall wireless LAN market is expected to exceed $10 billion by 2026, and see a healthy CAGR over the next five years.

However, offsetting this good news, according to the new report, "enterprise wireless LAN backlogs will balloon to over 100 percent of revenues in 2022, leaving companies to get inventive in their search for Wi-Fi coverage."

A boost in unit shipments is not expected until late 2023, with a return to normal unit growth still two years away.

“Wireless LAN market sales are being dragged down by manufacturers’ record-breaking backlogs,” reports Siân Morgan, Wireless LAN research director at Dell'Oro Group.

Morgan continues:

“Our recent interviews have revealed that the lead time for receiving wireless LAN access points has stretched to between six months and a year – a significant change from the ‘weeks-to-months’ that enterprises were waiting at the end of 2021.

Supply constraints have shifted, including not just the main Wi-Fi chips but also secondary or even tertiary components.

With a limited ability to fulfill the orders flooding in, manufacturers will focus their late 2022 and early 2023 shipments on working down outstanding backlogs: mainly orders for Wi-Fi 6.

Unit shipments should start to loosen up later in 2023, about the time Wi-Fi 7 appears on the market."

The analyst's Wireless LAN July 2022 5-Year Forecast Report further reveals that a calculation on published backlog levels of manufacturers outside China reveals order books swelling to over ten times their normal level, exceeding the size of their annual revenues.

Meanwhile, Dell'Oro states that this year’s market growth of nine percent will be mainly fueled by price increases, with unit shipments remaining constrained.

The analyst further warns that increased prices will boost 2023 revenues as manufacturers pass on higher costs, but that price erosion will begin to take hold in 2024 and beyond.

Additionally, the analyst predicts that the first enterprise-class Wi-Fi 7 shipments in the fourth quarter of 2023 may dampen the take-up of Wi-Fi 6E.

Finally, the analyst projects that while the adoption of public cloud-managed wireless LAN technology will expand, a substantial portion of customers will prefer private cloud and on-premises solutions as enterprises reevaluate their cloud strategies.

“Enterprises are going to creative lengths to procure Wi-Fi solutions, such as prolonging existing support contracts, using older equipment or even repurposing consumer-grade routers," concludes Dell'Oro's Morgan. "Systems integrators are recommending ways to enable more applications, squeezing more value from the existing network infrastructure. In sum, now is a time characterized by invention."

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