The Optical Transmission Equipment Market Is Expected To Resume Growth After Adjustment in 2024

According to the latest forecast released by Dell'Oro Group, the optical transmission equipment market is expected to return to the growth trajectory after experiencing a sharp decline in 2024 caused by oversupply and poor macroeconomic conditions. After this adjustment period, the optical transmission market is expected to grow at an average annual rate of 4% over the next five years, reaching £16 billion by 2029.

"We believe that the decline in optical transmission equipment revenue in 2024 is an adjustment phase in the market cycle designed to match supply with demand," said Jimmy Yu, vice president of Dell'Oro Group. "Often, service providers are better able to assess future equipment needs after reducing purchases, creating a more positive environment for network operators and equipment manufacturers."

Other highlights from the January 2025 Five-Year Optical Transmission Forecast include:

- Cumulative installed wavelength division multiplexing (WDM) capacity is expected to grow at an average annual rate of 30% through 2029, taking into account additional pre-pandemic installed capacity and subsequent inventory adjustments.

- While the majority of data centre interconnect (DCI) in metro applications is expected to move to IPoDWDM, long-haul DWDM for DCI is expected to grow at a five-year CAGR of 12%, driven by large Internet content providers (ICPs).

- The market will continue to shift to higher wavelength speeds to lower the price per bit and improve spectral efficiency. The highest available speed in 2025 will be wavelengths capable of 1.6 terabits per second (Tbps). We believe that 2.4 Tbps coherent technology is in development and could be available as early as 2027.