IP-over-DWDM systems demand is expected to grow at an average annual rate of 16 percent, reaching $4.4 billion by 2030, according to a new report from Dell’Oro Group. Shipments of ZR+ optical pluggable modules in routers and switches are expected to jump in 2026 as hyperscalers increasingly scale-across data centers to build larger AI factories.
“The interest level in ZR+ optics has grown by ten times since just a year ago,” said Jimmy Yu, Vice President at Dell’Oro Group. “In the original inception of coherent ZR pluggable modules, the dominant use case was for interconnecting data centers less than 80 kilometers apart. The ZR+ versions were developed as an afterthought without a clear need. Since then, with the sudden rise in power-hungry AI data centers, the need has shifted to moving data centers farther out, with much more fiber capacity between them to handle the intensive AI workloads. This need to scale-across data centers to build up AI training centers is sharply pivoting demand for IPoDWDM systems with large amounts of ZR+ optics,” added Yu.
Additional highlights from the IPoDWDM and Disaggregated WDM Advanced Research Report:
- Demand for IPoDWDM systems started to recover in 2Q 2024 and is on track to grow nearly 40 percent in 2025. ZR optics is the dominant pluggable used in IPoDWDM to date.
- Scale-across DCI is expected to change the market dynamics, driving a sharp increase in 800 ZR+ optical module shipments in 2026. Based on projections for volume and average sales price, over one-third of IPoDWDM ZR/ZR+ revenue is expected to be from 800 ZR/ZR+ module shipments in the year.
- In 3Q 2025, the top three suppliers for ZR/ZR+ optical pluggable modules listed in order of highest volume shipments to lowest were Marvell, Cisco, and Ciena.
- Over 25 percent of IPoDWDM system revenue is expected to be from non-DCI applications by 2030 as more communication service providers adopt the technology in their networks.
