The Optical Transport equipment market expanded 10 percent in 2025, fueled by a sharp rebound in data center interconnect (DCI) spending, according to a new report from Dell’Oro Group. Revenue from direct purchases of WDM equipment for DCI climbed nearly 40 percent year-over-year, marking a significant acceleration tied to hyperscale AI data center buildouts.
Cloud providers drove the surge, with direct purchases increasing roughly 50 percent in 2025 as operators added WDM transponders, ZR optics, and optical line systems. Both traditional Optical Transport Systems and IPoDWDM ZR/ZR+ optics contributed to the year’s performance. The Disaggregated WDM segment outpaced expectations, growing approximately 40 percent, supported by demand across transponder units, OLS platforms, and IPoDWDM ZR/ZR+ modules.
Vendor rankings remained concentrated. The top five system vendors in 2025, based on revenue share, were Huawei, Ciena, Nokia, ZTE, and Cisco. In the DCI segment specifically, the top three suppliers were Ciena, Nokia, and Cisco, with a high concentration of revenue coming from North America. Dell’Oro forecasts overall Optical Transport market growth of 10 percent in 2026, with DCI revenue expanding at a significantly higher rate.
- Optical Transport market revenue increased 10% in 2025
- Direct WDM purchases for DCI rose nearly 40% year-over-year
- Direct cloud provider purchases grew around 50% in 2025
- Disaggregated WDM segment expanded approximately 40%
- Strong demand across transponders, OLS, and IPoDWDM ZR/ZR+ optics
- Top 5 system vendors (revenue share): Huawei, Ciena, Nokia, ZTE, Cisco
- Top 3 DCI suppliers: Ciena, Nokia, Cisco
- Optical Transport market projected to grow 10% in 2026; DCI expected to outpace overall market
“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.
