There are signs of life in the optical networking industry.
A new Dell’Oro report revealed that the Optical Transport equipment market grew 1 percent year-over-year in the first quarter of 2025.
The research firm noted that 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.
Jimmy Yu, VP at Dell’Oro Group, said the first quarter saw positive growth in the North American market, particularly for DCI.
“Now that we are out of the customer inventory correction phase or digestion period, as some call it, we are seeing renewed spending on DWDM systems for more capacity between data centers,” he said. “We calculate that DCI spending increased over 40 percent year-over-year in the quarter, reaching a record revenue level.”
Yu added, “This is just the direct spend by companies to build their networks,” and “we think managed networks being built by operators for hyperscale companies is also growing on top of this.”
Ciena, Huawei and Nokia rise
The optical networking market continued to be dominated by three vendors--Huawei, Ciena, and Nokia.
These vendors all reported year-over-year growth rates of 2 percent, 15 percent, and 54 percent, respectively.
Dell’Oro noted that 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 company revenue grew 19 percent,” Yu said.
Regional variances
Besides North America, the Middle East, Africa, and India also saw double-digit growth rates in the quarter.
However, four regions of the world that we report on declined year over year: China, Europe, Japan, and Latin America.
Overall, total WDM revenue was nearly flat year-over-year in the first quarter. DWDM Long Haul grew for a second consecutive quarter, and WDM Metro declined for a seventh quarter.
Yu noted that “adopting 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.”
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Sean Buckley
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