Recovery of the Optical Transport Equipment Market Forecasted After 2024 Correction

Optical Transport Equipment Market Expected to Grow

The Optical Transport equipment industry is set to bounce back following a significant correction period in 2024. According to a recent report by the renowned market research firm, Dell'Oro Group, the market has experienced a downturn primarily due to an oversupply situation coupled with unfavorable macroeconomic conditions. Nevertheless, this decline is viewed as a necessary corrective phase aimed at stabilizing supply and demand dynamics.

Projected Growth

The report predicts an average annual growth rate of 4% for the Optical Transport segment over the next five years. This recovery will see the market size expand to a projected $16 billion by 2029. Jimmy Yu, Dell'Oro Group's Vice President, expressed optimism regarding the outlook for the market by stating that service providers who have recalibrated their purchasing strategies will be better equipped to assess future equipment needs. This enhancement in judgment is expected to foster a more favorable atmosphere for network operators and equipment manufacturers alike.

Key Highlights from the Report

1. Cumulative WDM Capacity: The report highlights that the cumulative Wavelength Division Multiplexing (WDM) capacity installed is forecasted to grow at an impressive average annual rate of 30% through 2029. This figure takes into account additional capacity added before the pandemic, as well as the subsequent inventory correction that ensued.

2. Market Shift to Higher Speeds: As the market continues to evolve, a noticeable shift toward higher wavelength speeds can be observed. This transition aims to reduce the price per bit and amplify spectral efficiency. The report anticipates the highest speed available in 2025 to be capable of handling wavelengths of up to 1.6 Terabits per second (Tbps). Moreover, it is believed that technology capable of 2.4 Tbps is currently under development and might be available as early as 2027.

3. Data Center Interconnect Trends: There is also a significant shift anticipated in data center interconnect (DCI) technologies. While much of this segment is expected to transition to Internet Protocol over DWDM (IPoDWDM) for metro applications, the long-haul DWDM market for DCI is projected to witness an encouraging five-year compound annual growth rate (CAGR) of 12%. This growth will primarily be driven by major Internet content providers (ICPs).

Conclusion

In conclusion, the Optical Transport equipment market is poised for a notable recovery following the correction phase of 2024. With a recalibrated outlook and enhanced decision-making by key stakeholders, a promising growth trajectory is established. The upcoming years will be crucial as the industry adapts to emerging technologies and market demands.