- Dell’Oro said optical transport revenue reached $16B in 2025
- Neocloud providers could soon become larger buyers of optical gear, said Dell’Oro VP Jimmy Yu
- Huawei, Ciena, Nokia, ZTE and Cisco are the top providers of optical equipment
Optical transport came back with a bang in 2025, with Dell’Oro noting revenue rose to $16 billion on account of cloud spend for data center interconnect (DCI).
Hyperscalers unsurprisingly made up the bulk of purchasing for wave division multiplex (WDM) transponders, ZR/ZR+ pluggables and optical line systems (OLS) as they prepare their data centers for AI workloads. But neoclouds are also starting to fuel growth in the market, said Dell’Oro VP Jimmy Yu.
“I think neoclouds are an emerging customer base that is growing quickly in size and could become larger buyers of optical transport equipment,” he told Fierce.
Neocloud providers, such as CoreWeave, Crusoe and Nebius, are expected to see revenue soar to nearly $180 billion by 2030, per Synergy Research Group data. Since these companies specialize in AI infrastructure like GPU-as-a-service, “this group may experience faster bandwidth growth,” Yu said, but he doesn’t think neoclouds will overtake hyperscalers on equipment purchasing anytime soon.
Demand for disaggregated WDM gear “continued to outperform expectations,” Dell’Oro noted, with revenue increasing 40% in 2025 across OLS, transponder units and IP over DWDM. The latter involves integrating IP traffic directly onto Dense Wavelegth Division Multiplexing (DWDM) optical layers without the need for additional transponders.
The concept of disaggregated WDM has been around for roughly a decade, Yu explained, as cloud providers and network operators sought a more efficient way of procuring transponders and optical gear without vendor lock-in.
Top optical players
The top optical suppliers in 2025 by revenue were Huawei, Ciena, Nokia, ZTE and Cisco. Ciena, which recently pulled back from access to focus more on AI, saw the highest market share gain with a 3% increase, Yu said.
Nokia’s $2.3 billion Infinera acquisition “has proven itself to be a good decision,” he added, as the combined companies witnessed a 2% market share increase. Meanwhile Cisco’s optical business grew by 1%, with the vendor recently highlighting an uptick from cloud demand alongside a rebound in service provider spend.
Will supply limit 2026 optical growth?
Given vendor concern over a constrained fiber supply, we wondered if optical component makers are bound to face similar supply chain challenges in 2026.
Yu said while he hasn’t heard of such issues in optical to-date, he is “increasingly worried that supply could become a limiting factor in the 2026 market growth rate.”
For instance, Ciena in December said it’s “essentially sold out” in supply as it enters 2026 with about $5 billion in backlog and Corning has noted tightness in optical manufacturing capacity.
“Whenever demand grows too quickly, lead times lengthen, and vendors comment that revenue would have been higher if we had enough of something,” Yu said, referring to components, manufacturing capacity, testers and the like.
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