The growth was driven by a strong demand for data centre interconnect, especially by large internet content providers
A new Dell’Oro Group report found that the optical transport equipment market grew 1% year-over-year in 1Q 2025, but the growth is very uneven across the world’s regions. In the US, the sector grew 24% in Q1 in the quarter due to the strong demand for data centre interconnect (DCI), particularly among large internet content providers. The Middle East and Africa, and India also experienced growth.
On the other hand, growth declined in Europe, Japan and Latin America.
Jimmy Yu, Vice President at Dell’Oro Group, said, “Now that we are out of the customer inventory correction phase or digestion period, as some like to call it, we are seeing renewed spending on DWDM systems for more capacity between data centers.
“We calculate that DCI spending increased over 40% year-over-year in the quarter, reaching a record revenue level. This is just the direct spend by companies to build their networks. We think managed networks being built by operators for hyperscale companies is also growing on top of this,” added Yu.
Highlights from the report include:
- The top three vendors in the quarter were Huawei, Ciena, and Nokia. All three vendors reported positive year-over-year growth rates of 2%, 15% and 54%, respectively. 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 combined company revenue grew 19%.
- Total WDM revenue was nearly flat year-over-year in 1Q 2025. DWDM Long Haul grew for a second consecutive quarter, and WDM Metro declined for a seventh consecutive quarter. Dell’Oro believes the adoption of 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.
