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AI Boom Drives Surge in Data Center Interconnect Demand; Global Market Value to Grow 14.3% in 2025
May 19, 2025 | TrendForceEstimated reading time: 2 minutes

TrendForce reports that leading global telecom providers such as SK Telecom and Deutsche Telekom are rolling out Agentic AI services for general users as generative AI becomes increasingly integrated into daily life in 2025. With telecom providers and major CSPs continuing to expand their data center infrastructure, Data Center Interconnect (DCI) technology is gaining significant traction. The global DCI market is projected to grow 14.3% YoY in 2025 to surpass US$40B.
TrendForce explains that DCI enables high-speed data transmission across short to long distances between two or more data centers. This significantly alleviates the massive computational load driven by AI data processing. Currently, DCI implementation is being pursued through collaborations between optical communication equipment providers and telecom operators across the US, Northern Europe, and Southeast Asia. Among them, US-based Ciena leads in DCI deployment, with its telecom partners—Telia, e&, and Arelion—adopting the Wavelength Logic6 Extreme solution.
Nokia is also expanding its DCI footprint into regions such as Saudi Arabia and Vietnam. In Vietnam, Nokia has partnered with local telecom giant Viettel, utilizing its PSE-6s optical engine to achieve terabyte level inter-city data transmission. Meanwhile, the company is driving adoption of optical transceiver modules in telecom-operated data centers, with speeds transitioning from 400G to 800G and eventually 1.6T.
TrendForce notes that the rising value of the DCI market will in turn fuel demand for advanced components like 800G and 1.6T optical transceiver modules. In the global DCI supply chain, upstream players are primarily focused on laser light sources, optical modulators, optical sensors, laser diodes, and fiber cables. The midstream is composed of major optical switch and transceiver module makers such as Cisco, Nokia, and Zhongji Innolight, who supply solutions to DCI system integrators like Ciena.
DCI demand bolsters Taiwan’s optical component supply chain
The growing DCI needs of Cisco, Nokia, and other global optical players—coupled with the aggressive expansion of telecom data centers—are driving demand for optical components from Taiwanese manufacturers. Companies such as Browave Corporation are supplying wavelength division multiplexers (WDMs), while FOCI, LUXNET Corporation, PCL Technologies, and APAC Opto Electronics Inc. provide optical transceiver modules.
High-end 800G transceiver modules have already entered mass production. However, demand for 1.6T modules remains in the early ramp-up phase, as most DCI deployments are still in early stages. Meanwhile, leading Taiwanese network equipment providers such as Accton, Sercomm, and WNC are offering DCI switch solutions to meet the evolving needs of US-based telecom operators and CSPs.
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