The global optical transport equipment market roared back in Q2 2025, showing a striking 14% year-on-year growth after a long stretch of decline. Rapid demand for disaggregated wavelength division multiplexing (WDM) and data centre interconnect (DCI) systems is fueling this comeback.
Hyperscale cloud providers are at the heart of this surge. Dell’Oro Group’s latest report points to a shift that’s shaking up the industry and changing what matters in digital infrastructure.
The Surge in Disaggregated WDM Systems
Disaggregated WDM is gaining momentum fast. Instead of sticking with proprietary, all-in-one systems from a single vendor, this approach splits up the main pieces—transponders, optical line systems, and pluggable optics.
Operators get more flexibility, adopt new tech quicker, and sidestep vendor lock-in. Plus, they can cut costs.
Why Disaggregation is Winning
The numbers are hard to ignore: disaggregated WDM jumped by 35% year-on-year in Q2 2025. What’s driving it?
- Transponder units – these handle high-speed optical signal conversion and scale up easily.
- Optical line systems – they deliver reliable, high-capacity transmission paths.
- ZR/ZR+ pluggable optics – they make it easier for IP routers to hook right into dense WDM networks.
These advances are a big deal for data centre interconnect setups, where the hunger for fast, low-latency links just keeps growing.
Cloud Providers Driving Demand
Hyperscale cloud providers are adopting these systems at breakneck speed. Dell’Oro’s data shows their direct purchases of WDM systems shot up by 60% over last year.
That’s mostly thanks to booming artificial intelligence workloads and the relentless need for more cloud computing and storage capacity.
Telecom Players Miss the Pace
Communication service providers are spending more on optical transport too, but their impact pales next to the cloud titans. The balance of power is shifting—giant data centre operators are now leading infrastructure investment.
Top Vendors in the Market
Q2 2025’s top six vendors by revenue share:
- Huawei
- Ciena
- Nokia
- ZTE
- FiberHome
- Cisco
It’s a pretty diverse group, which keeps the competition lively and the options wide open. For data centre operators, mixing and matching vendors isn’t just smart—it’s practically required now.
By using gear from different providers, operators can build networks that are tougher and more adaptable. It also helps them roll out new tech faster.
Optical Transport as a Strategic Priority
The comeback of the optical transport market shows just how crucial it’s become for digital infrastructure. Servers need power and cooling, sure, but data centres can’t function without strong interconnects.
With AI models and cloud apps everywhere, high-bandwidth, low-latency optical links aren’t just nice to have—they’re essential.
Looking Ahead
Disaggregated solutions are speeding up innovation and cutting costs. They also make it easier to scale up, so the optical transport sector seems set for more growth.
Cloud workloads keep growing, and AI keeps spreading out. Because of that, demand for advanced WDM and DCI systems stays high. Vendors have to keep up, pushing themselves to create new solutions and adjust to whatever the next network trend might be.
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Here is the source article for this story: How Are Data Centres Driving Optical Transport Growth?