Growth in data center interconnect (DCI) demand is surging due to the boom in artificial intelligence (AI) particularly as AI becomes increasingly integrated into daily life in 2025, according to new research from market research firm TrendForce.
The global DCI market is projected to grow 14.3% year-over-year in 2025 and surpass the $40 billion mark as companies continue to expand data center infrastructure.
DCI enables high-speed data transmission across short to long distances between two or more data centers. This, TrendForce said, helps the massive computational load driven by AI data processing. Most of the current DCI implementations are through collaborations between optical communication equipment providers and telecom operators across the U.S., Northern Europe and Southeast Asia.
Nokia said it is expanding its DCI footprint into regions like Saudi Arabia and Vietnam, partnering with local telecoms in the regions to achieve up to terabyte level inter-city data transmission. Nokia is also driving adoption of optical transceiver modules in telecom-operated data centers. These have speeds transitioning from 400G to 800G and eventually 1.6T, TrendForce said.
With rising value in the DCI market, demand for advanced components like 800G and 1.6T optical transceiver modules are likely. Vendors are going to be focused on:
- Laser light sources
- Optical modulators
- Optical sensors
- Laser diodes
- Fiber cables
TrendForce said these growing DCI needs of Cisco, Nokia and other global optical players will drive optical component demand from Taiwanese manufacturers. This includes Browave Corp. with its wavelength division multiplexers and FOCI, LUXNET Corp., PCL Technologies and APAC OptoElectronics Inc. for optical transceiver modules.
