Cloud providers become growth catalysts of the optical transport market

A new Dell’Oro Group report revealed that the market is in a rebound period following a downturn.
July 22, 2025
3 min read
  • Cloud providers have become a key element of growth in the optical networking industry.
  • Dell'Oro Group forecasts the optical transport market will show growth in 2025.
  • Data center interconnect (DCI) is set to grow at twice the rate of the overall market.
  • IPoDWDM momentum continues to ramp. 

As cloud providers seek to expand their reach, the optical industry is experiencing a new growth cycle.

Dell’Oro Group revealed in its new forecast that the optical transport market is forecast to return to growth in 2025 after declining 9 percent in 2024.

Following the steep decline caused by oversupply and poor macroeconomic conditions, the research firm predicts that the optical transport market will grow at an average annual rate of 5 percent over the next five years, reaching $19 billion by 2029.  

DCI growth accelerates

A significant factor in the growth of optical transport will be data center interconnect (DCI), which is set to grow at twice the rate of the overall market.

Within the DCI market segment, data center operators are projected to migrate to IPoDWDM in metro applications. The research firm said that DWDM Long Haul for DCI is expected to grow at a five-year compounded annual growth rate (CAGR) of 15 percent, driven by cloud providers.

“We are anticipating that the time has come to interconnect all those new AI data centers being built,” said Jimmy Yu, Vice President at Dell’Oro Group. “We are forecasting data center interconnect to grow at twice the rate of the overall market, driven by increased spending from cloud providers.”

About the Author

Sean Buckley

Sean is responsible for establishing and executing the editorial strategy of Lightwave across its website, email newsletters, events, and other information products.

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