North America Data Center Interconnect Market Up Over 40 Percent
REDWOOD CITY, Calif. – May 22, 2025 – According to a recently published report from Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the Optical Transport equipment market grew 1 percent year-over-year in 1Q 2025. However, due to the strong demand for data center interconnect (DCI), particularly among large internet content providers, the optical equipment market in the North American region experienced a 24 percent year-over-year growth.
“This was another great quarter for optical transport gear in North America,” said Jimmy Yu, Vice President at Dell’Oro Group. “Now that we are out of the customer inventory correction phase or digestion period, as some like to call it, we are seeing renewed spending on DWDM systems for more capacity between data centers. We calculate that DCI spending increased over 40 percent year-over-year in the quarter, reaching a record revenue level. And this is just the direct spend by companies to build their networks. We think managed networks being built by operators for hyperscale companies is also growing on top of this,” added Yu.
Additional highlights from the 1Q 2025 Optical Transport Quarterly Report:
- The top three vendors in the quarter were Huawei, Ciena, and Nokia. All three vendors reported positive year-over-year growth rates of 2 percent, 15 percent, and 54 percent, respectively. Nokia’s high growth rate is attributed to the acquisition of Infinera, which was completed at the end of February 2025, and added one month of Infinera’s product revenue. If we combine Nokia and Infinera for all three months, the combined company revenue grew 19 percent.
- Three regions of the world that we report on posted strong double-digit growth rates in the quarter. The three regions were North America, Middle East and Africa, and India.
- Four regions of the world that we report on declined year-over-year. Those regions were China, Europe, Japan, and Latin America.
- Total WDM revenue was nearly flat year-over-year in 1Q 2025. DWDM Long Haul grew for a second consecutive quarter, and WDM Metro declined for a seventh consecutive quarter. We believe the adoption of IPoDWDM has been a headwind to the WDM Metro segment, contributing to its recent declines along with the inventory glut and poor macroeconomic conditions in many countries.
The Dell’Oro Group Optical Transport Quarterly Report offers complete, in-depth coverage of the market with tables covering manufacturers’ revenue, average selling prices, and unit shipments (by speed up to 1.6 Tbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), optical switch, optical packet platforms, data center interconnect (metro and long haul), and disaggregated WDM. To purchase this report, please contact us at dgsales@delloro.com.
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, and data center infrastructure markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit https://www.delloro.com.
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