Data Center Interconnect Drove Recovery with 40 Percent Growth
REDWOOD CITY, Calif. – February 18, 2026 – 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 10 percent in 2025, driven by demand for data center interconnect (DCI). Revenue from direct purchases of WDM equipment for DCI grew nearly 40 percent in the year.
“Sales of optical equipment for DCI spiked in 2025 due to huge demand from cloud providers,” said Jimmy Yu, Vice President at Dell’Oro Group. “In our study, we found that direct cloud provider purchases grew around 50 percent in 2025 as they bought more WDM transponders, ZR optics, and optical line systems. For the year, hyperscalers continued to account for the bulk of purchases, but we think neoclouds are now making decisions to purchase more optical transport equipment. Looking ahead, we are expecting more of the same for 2026 with one exception: cloud providers will build scale-across DCI to expand their AI data centers,” added Yu.
Additional highlights from the 4Q 2025 Optical Transport Quarterly Report:
- Both Optical Transport Systems and IPoDWDM ZR/ZR+ optics contributed to the strong 2025 results.
- The Disaggregated WDM market continued to outperform expectations throughout the year, growing approximately 40 percent due to strong demand across all of the individual technology segments: transponder units, optical line systems (OLS), and IPoDWDM ZR/ZR+.
- The top five system vendors in 2025, ranked by revenue share, were Huawei, Ciena, Nokia, ZTE, and Cisco. For DCI, the top three suppliers by revenue share were Ciena, Nokia, and Cisco, with a high concentration of revenue coming from North America.
- The Optical Transport market is forecast to grow 10 percent in 2026, with revenue from DCI growing at a much higher rate.
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), data center interconnect (metro and long haul), disaggregated WDM systems, and IPoDWDM ZR/ZR+ Optics. 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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