The rapid expansion of artificial intelligence (AI) in 2025 has positioned it as a key driver of demand in the Data Center Interconnect (DCI) market.
According to TrendForce, leading global telecom providers like SK Telecom and Deutsche Telekom are leveraging generative AI to offer Agentic AI services to general users, pushing data processing needs to unprecedented levels. As AI applications proliferate, the demand for robust, high-speed data center interconnection solutions has surged, positioning DCI technology as a critical infrastructure component.
The Role of DCI in AI Data Processing
DCI technology facilitates high-speed data transmission across short to long distances between data centers, effectively alleviating computational bottlenecks caused by AI data processing.
The global DCI market is projected to grow by 14.3 percent YoY in 2025, surpassing $40 billion, as telecom providers and cloud service providers (CSPs) invest heavily in data center infrastructure.
In the US, Ciena has emerged as a leader in DCI deployment, partnering with major telecom operators such as Telia, e&, and Arelion to implement its Wavelength Logic6 Extreme solution.
Nokia is also expanding its DCI capabilities, particularly in emerging markets like Saudi Arabia and Vietnam. In collaboration with Viettel, Nokia is deploying its PSE-6s optical engine to achieve terabyte-level data transmission across inter-city networks. This underscores the growing need for scalable DCI solutions capable of handling the massive data volumes generated by AI-driven applications.
Optical Component Demand Surges
The rise in DCI deployment is creating significant demand for advanced optical components, including 800G and 1.6T optical transceiver modules. While 800G modules have entered mass production, 1.6T modules are still in the early ramp-up phase, as most DCI deployments are in nascent stages.
According to TrendForce, the DCI supply chain consists of upstream players focused on laser light sources, optical modulators, and fiber cables, while midstream players such as Cisco, Nokia, and Zhongji Innolight supply advanced transceiver modules to DCI system integrators.
Taiwan’s Optical Component Supply Chain Gains Momentum
Taiwanese manufacturers are positioned to benefit significantly from the growing DCI market. Companies like Browave Corporation are supplying wavelength division multiplexers (WDMs), while FOCI, LUXNET Corporation, and PCL Technologies are ramping up production of 800G and 1.6T transceiver modules. In addition, Accton, Sercomm, and WNC are developing DCI switch solutions tailored to meet the evolving demands of US-based telecom operators and CSPs.
Conclusion
As AI continues to reshape data processing and network infrastructure, the demand for DCI technology is expected to grow exponentially. Telecom operators and CSPs are scaling up their data center networks to accommodate the surging data loads generated by AI-driven services, propelling the DCI market to new heights. With advanced optical components and transceiver modules in high demand, the DCI supply chain is poised for significant growth, presenting lucrative opportunities for global and regional players alike.
InfotechLead.com News Desk
