#USA #Redwood City #optical transport #Dell'Oro Group #Data Center Interconnect

Optical Transport Market Insights for 2025

The latest report from Dell'Oro Group, a reputable source of market insights in the telecommunications sector, reveals that the optical transport equipment market is on track to grow by 10% in 2025, reaching a remarkable $16 billion. This surge is attributed primarily to the increasing demand for data center interconnect (DCI) capabilities.

Rise in Data Center Interconnect Demand

In the year 2025, revenue generated from direct purchases of WDM (Wavelength Division Multiplexing) equipment specifically for DCI witnessed a substantial rise, soaring nearly 40%. According to Jimmy Yu, Vice President at Dell'Oro Group, this trend was largely propelled by cloud service providers, whose purchasing activities for optical equipment surged by approximately 50% during the same period. The need for enhancements in WDM transponders, ZR optics, and optical line systems became pivotal for these organizations as they expand their data handling capabilities.

Yu emphasized that while hyperscalers (large, cloud service providers) predominantly influenced these sales figures, there’s a noticeable evolution occurring with neo clouds beginning to invest significantly in optical transport equipment. Looking ahead, Dell'Oro Group anticipates sustained growth in optical transport with potential market developments expected to be particularly concentrated around scaling DCI solutions for advanced AI data centers in 2026.

Highlights from the 4Q 2025 Optical Transport Quarterly Report

Several notable trends were identified in the quarterly report:

• - Both Optical Transport Systems and IPoDWDM ZR/ZR+ optics were key contributors to the robust market performance in 2025.
• - The Disaggregated WDM market outperformed projections throughout the year, growing by about 40% across various technology segments, including transponder units and optical line systems.
• - When ranking by revenue share, the top five system providers were Huawei, Ciena, Nokia, ZTE, and Cisco, with Ciena, Nokia, and Cisco leading the market specifically within the DCI segment.

Interestingly, a significant portion of revenue linked to optical transport equipment emanates from North America, showcasing the region's pivotal role in driving industry growth.

Looking Forward

Projected growth for the Optical Transport market in 2026 suggests a similar upward trajectory, particularly for revenue generated from DCI, which is expected to rise at an accelerated pace. This outlook indicates that optical technology continues to be a cornerstone for advancing global telecommunications infrastructure.

About Dell'Oro Group

Dell'Oro Group specializes in comprehensive market research, particularly focusing on telecommunications, security, enterprise networks, and data center sectors. It offers critical quantitative data and qualitative analyses that support essential business decision-making processes. For more detailed insights, stakeholders are encouraged to reach out to Dell'Oro Group via their website or contact their offices.

As companies navigate the competitive landscape characterized by rapid technological advancements, the Optical Transport market stands out as a critical segment, enhanced by the increasing demand for seamless data transfer capabilities needed for thriving digital economies.