NetworkTigers examines the top networking OEM challenges shaping 2025, from supply chain disruptions to shifting standards, security risks, and pricing pressure.
In an era defined by explosive growth in data consumption fueled by IoT deployments, cloud computing, and bandwidth-hungry applications, networking infrastructures are under unprecedented pressure. Original Equipment Manufacturers (OEMs) play a critical role in supplying the routers, switches, and wireless gear that form the backbone of modern connectivity. Here are the key challenges these OEMs must overcome to remain competitive and meet the ever-evolving demands of today’s digital landscape.
Supply chain and manufacturing disruptions
Amidst unprecedented global volatility, OEMs in the networking industry must navigate a complex landscape of component shortages, shipping delays, and logistical challenges that threaten production schedules and profitability.
Global component shortages
OEMs have been grappling with a severe scarcity of key parts—from advanced semiconductors to multilayer ceramic capacitors and resistors—which has forced many to pause production or accept higher costs. Disruptions in semiconductor fabrication and constrained output of passive components have become persistent hurdles, driven by geopolitical tensions and surging demand across multiple sectors.
Logistical bottlenecks
Beyond parts shortages, shipping delays, and port congestion have created ripple effects throughout supply chains. Approximately 70% of major 24/7 ports report significant vessel wait times, which in turn prolong lead times and increase freight costs. These bottlenecks can lead to empty inventory shelves and further strain on just-in-time manufacturing models.
Strategies for resilience
To bolster their operations against future disruptions, OEMs are adopting multi-faceted resilience strategies. Dual sourcing of critical components, maintaining buffer inventories to mitigate demand fluctuations, and localizing assembly through regional hubs help absorb shocks and reduce reliance on a single supplier.
Rapid technological evolution
In an industry marked by relentless innovation, OEMs must rapidly adopt next-generation standards while ensuring compatibility and market readiness.
Accelerated shift to Wi-Fi 6/6E/7, 5G, and beyond
Network hardware OEMs are under increasing pressure to integrate evolving standards. Wi-Fi 6 shipments are projected to surpass 5.2 billion by 2025, with 41% of those devices supporting Wi-Fi 6E. Enterprises are also preparing for broader adoption of Wi-Fi 7, which promises higher speeds and lower latency. On the cellular front, Ericsson forecasts that global 5G subscriptions will reach 6.3 billion by 2030, accounting for 80% of all mobile data traffic, driving OEMs to accelerate development of 5G routers and fixed wireless access solutions to meet escalating demand.
High R&D costs to develop and certify new standards
Developing and certifying hardware compliant with new Wi-Fi and cellular standards demands substantial investment. Launching a new radio chip can cost up to $600 million in silicon design and validation efforts alone, according to Gartner estimates. In comparison, Wi-Fi certification costs range from tens of thousands to over $100,000 per region.
Balancing legacy product support with innovation pipelines
OEMs must allocate significant engineering resources to the ongoing maintenance and lifecycle support of legacy products. This includes managing obsolete components, fragmented documentation, and ensuring compliance with recertification requirements. These efforts are crucial for sustaining performance while also freeing up capacity for next-generation product development.
Cybersecurity and regulatory compliance
In today’s threat landscape, OEMs must address both advanced cyberattacks and stringent regulatory requirements to safeguard their products and customers.
Increasingly sophisticated threats
Zero-day vulnerabilities in network edge devices are among the most exploited entry points, with attackers chaining multiple exploits to gain access. In early 2025, CISA issued an alert regarding the “Resurge” malware, which exploits a critical stack buffer overflow in Ivanti appliances, techniques similar to those used by Chinese nation-state actors. Meanwhile, Five Eyes advisories highlight the rapid rise of zero-day exploits on routers and switches.
Mandatory certifications and data-privacy regulations
OEMs must comply with data protection laws, such as the EU’s GDPR and California’s CCPA, which mandate explicit consent, data minimization, and breach notification processes. Simultaneously, U.S. FCC equipment authorization under 47 CFR Part 15 requires testing at accredited labs, formal approval, and clear labeling to ensure RF devices meet interference and safety standards.
Embedding “Security by Design” vs. retrofitting patches
Rather than relying solely on reactive firmware updates, leading OEMs are adopting Secure-by-Design principles—integrating threat modeling, hardened defaults, and continuous security testing throughout the development lifecycle. This proactive approach reduces exploitable flaws at source, as recommended by CISA and industry best practices.
Price pressures and margin compression
In a commoditized market, networking OEMs face intense competition that squeezes profit margins from all sides.
Fierce competition from Tier-1 brands and low-cost ODMs
Leading vendors, such as Cisco and Juniper, set high expectations for performance and support. In contrast, contract manufacturers and Original Design Manufacturers (ODMs), including Foxconn and specialized partners like VVDN, offer similar hardware at lower costs, driving downward price pressure across the industry.
Customer demand for “enterprise-grade” features at commodity prices
End users increasingly expect advanced capabilities—such as Wi-Fi 6 performance, multi-gigabit ports, and built-in security—at sub-$100 price points. Today, many Wi-Fi 6 routers retail for under $100, forcing OEMs to absorb higher R&D and component costs while maintaining competitive pricing.
Cost-optimization tactics: vertical integration and platform homogenization
To protect margins, OEMs pursue vertical integration—bringing R&D, chip design, and assembly in-house—and homogenize platforms across product lines. EMS providers report achieving 15–20% savings by sharing component inventories and shifting production to cost-optimized regions, which helps OEMs lower unit costs without sacrificing scale.
Future outlook and strategic imperatives
As networking OEMs navigate an increasingly complex landscape, success will hinge on three strategic imperatives: embracing software-defined architectures such as SD-WAN, SDN, and network slicing to deliver flexible, scalable solutions; investing in AI-driven analytics and predictive maintenance to enhance performance and reliability; and fostering agile partnerships across hardware, software, and cloud ecosystems to accelerate innovation and meet diverse customer needs. Aligning these priorities can help OEMs transform today’s challenges into tomorrow’s competitive advantages.
About NetworkTigers
NetworkTigers is the leader in the secondary market for Grade A, seller-refurbished networking equipment. Founded in January 1996 as Andover Consulting Group, which built and re-architected data centers for Fortune 500 firms, NetworkTigers provides consulting and network equipment to global governmental agencies, Fortune 2000, and healthcare companies. www.networktigers.com.
