The Optical Transport equipment market is forecast to return to growth following a steep decline in 2024 that was caused by oversupply and poor macroeconomic conditions, according to a new report from Dell’Oro Group . After this corrective period, the optical market is projected to grow at an average annual rate of 4 percent for the next five years, bringing the market size to $16 billion by 2029.
“We believe the Optical Transport equipment revenue decline in 2024 was a corrective phase in the market cycle to align supply with demand,” said Jimmy Yu, Vice President at Dell’Oro Group. “Typically, after taking a step back on purchases, service providers are better positioned to judge future equipment needs, creating a more positive environment for both the network operators and equipment manufacturers,” added Yu.
Additional highlights from the Optical Transport 5-Year January 2025 Forecast Report:
- Cumulative WDM capacity installed is forecast to grow at a 30 percent average annual rate through 2029 when accounting for the extra capacity installed before the pandemic and the subsequent inventory correction that followed.
- While much of data center interconnect (DCI) is projected to shift to IPoDWDM in metro applications, DWDM Long Haul for DCI is expected to grow at a five-year CAGR of 12 percent, driven by large Internet content providers (ICPs).
- The market will continuously shift to higher wavelength speeds to reduce the price-per-bit and increase spectral efficiency. The highest speed available in 2025 is 1.6 Tbps-capable wavelengths. We believe 2.4 Tbps-capable coherent technology is under development and will be available as early as 2027.