The Zacks Communication - Infrastructure industry appears mired in escalating capital expenditures for infrastructure upgrades, unpredictable raw material prices owing to Middle East geopolitical tensions, supply-chain disruptions amid the prolonged Russia-Ukraine war and high customer inventory levels. However, the industry is expected to benefit in the long run from an increasing user propensity to stay abreast of the latest digital innovations.
In this backdrop, IHS Holding Limited (NYSE: IHS) and DZS Inc. (NASDAQ: DZSI) are likely to gain from rising demand for scalable infrastructure for seamless connectivity with the wide proliferation of IoT, transition to cloud and next-gen technologies, and 5G rollout.
Industry Description
The Zacks Communication - Infrastructure industry players provide various infrastructure solutions for the core, access and edge layers of communication networks. Leveraging proprietary modeling and simulation techniques to optimize networks, the firms offer high-speed network access solutions across Internet protocol, asynchronous transfer mode and time division multiplexed architecture in both wireline and wireless network applications. Their product portfolio encompasses optical fiber and twisted-pair structured cable solutions, infrastructure management hardware and software, network racks and cabinets, fiber-to-home equipment like hardened connector systems, wireless network backhaul planning and optimization products, couplers and splitters, indoor, small cell and distributed wireless antenna systems and hardened optical terminating enclosures.
What's Shaping the Future of the Communication - Infrastructure Industry?
Surging Raw Material Prices: High raw material prices due to inflation, economic sanctions against the Putin regime and intensifying war-mongering conditions in the Middle East have affected the operation schedules of various firms. Extended lead times for basic components are also likely to hurt the delivery schedule and escalate production costs. The demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices.
Waning Demand: Efforts to offset substantial capital expenditure for upgrading network infrastructure by raising fees have reduced demand, as customers tend to switch to lower-priced alternatives. In addition, latent Sino-U.S. tensions relating to trade restrictions imposed on the ...