Data Center Interconnect Market Size, Share, and Trends Analysis, By Component (Hardware, Software, Services), By Technology (Ethernet, Fiber Channel, InfiniBand, Others), By Application (Disaster Recovery, Shared Data and Resources, Others), By End-Use (Government, Enterprises, Others), and By Region, Forecast 2025-2032

Data Center Interconnect Market Overview and Key Insights:

The global data center interconnect market reached USD 11.56 billion in 2024 and is expected to register a revenue CAGR of 12.8% during the forecast period. Rising growth of data generated by businesses, applications, and users, increasing adoption of cloud services, growing number of IoT devices and the associated data traffic, and rising demand for higher bandwidth are expected to drive revenue growth of the market.

Market Drivers:

Rising growth of data generated by businesses, applications, and users is the major factor driving revenue growth of the market. Global data creation is expected to reach 181 zettabytes by the end of 2025, marking a 23.13% year-over-year increase. Daily, this equates to 2.5 quintillion bytes, which translates to roughly 29 terabytes every second or 2.5 million terabytes each day. The adoption of cloud computing, IoT, AI, and big data analytics by organizations is fueling a rapid surge in the generation of digital information.

This surge in data creation requires seamless, high-capacity, and low-latency connections between data centers to ensure reliable storage, processing, and real-time access. Organizations expanding operations across multiple locations rely on DCI solutions to ensure efficient workload balancing, effective disaster recovery, and continuous business operations. It makes these technologies essential for modern digital infrastructure.

Market Opportunity:

Rising need for high-speed connectivity is creating significant opportunities for the market. Enterprises, cloud providers, and hyperscalers are now increasingly demanding fast data transfer across geographically distributed facilities. Growing reliance on latency-sensitive applications such as Artificial Intelligence (AI), IoT, real-time analytics, and video streaming requires robust, ultra-fast interconnect solutions that can handle massive data flows without compromising performance. This surge in demand is pushing organizations to adopt advanced optical networking technologies, higher bandwidth capacity, and low-latency architectures.

In November 2024, HGC Global Communications Limited (HGC), a leading ICT service provider and network operator, partnered with Ciena to implement advanced technology for its Data Center Interconnect (DCI) services. This collaboration aims to strengthen the nation’s digital infrastructure while meeting the rapidly growing need for high-speed, reliable connectivity among carriers, global cloud providers, and enterprise clients. This collaboration is creating significant opportunities for the market by boosting demand for advanced DCI solutions that deliver high-speed, reliable connectivity.

Recent Trends:

One recent trend in the data center interconnect market is the rise of next-gen Ethernet switching for AI-scale clouds. The rising expansion of artificial intelligence, machine learning, big data analytics, and hyperscale cloud applications is pushing the limits of traditional networking infrastructure. Enterprises and hyperscalers are running massive GPU and processor clusters that demand ultra-high bandwidth, extremely low latency, and seamless scalability to support data-intensive workloads. To meet these needs, technology leaders are introducing advanced Ethernet switch architectures that deliver unprecedented capacity and efficiency.

In June 2025, Broadcom introduced its Tomahawk 6 switch series, a next-generation networking chip built to power large-scale AI clusters. It is the first solution to deliver 102.4 Tbps of switching capacity on a single chip, offering twice the bandwidth of existing Ethernet switches. The Tomahawk 6 will also feature co-packaged optics, enabling lower power consumption and latency while enhancing long-term reliability and performance.

Restraints & Challenges:

Data privacy & security concerns are restraining revenue growth of the market. Enterprises remain cautious of moving large volumes of sensitive information between interconnected data centers. The surge in cyberattacks, ransomware threats, and strict regulatory frameworks like GDPR and CCPA has amplified the risks associated with managing data across borders. Breaches or unauthorized access to critical business information not only led to financial losses but also damaged brand trust. It is making many enterprises hesitant to fully adopt advanced DCI solutions. Vendors are under increasing pressure to integrate end-to-end encryption, intrusion detection, and zero-trust architectures into their offerings. It raises deployment costs and extends implementation timelines. This persistent challenge slows adoption rates and restrains revenue growth of the market.

Component Segment Insights and Analysis:

Based on the component, the data center interconnect market is segmented into hardware, software and services. Hardware segment is further sub-segmented into cables, switches, routers, optical DCI, and others. Software segment is further sub-segmented into network management software, analytics & optimization software, software-defined networking (SDN), and others. Services segment is further sub-segmented into consulting services, managed services, and professional services.

Hardware segment contributed the largest share in 2024, due to the rising demand for high-performance networking infrastructure that can handle massive data volumes and support latency-sensitive applications. Enterprises and hyperscalers are investing heavily in advanced routers, switches, optical transport equipment, and coherent optics to enable seamless, high-speed interconnection between geographically distributed data centers. The surge in AI-driven workloads, cloud adoption, and big data analytics is driving the need for scalable hardware solutions capable of delivering ultra-high bandwidth and low-latency performance.

In September 2025, Giga Computing, a subsidiary of GIGABYTE Group, introduced a new model in its NVIDIA RTX PRO Server lineup. The XL44-SX2-AAS1 is equipped with NVIDIA RTX PRO 6000 Blackwell Server Edition GPUs, NVIDIA BlueField-3 DPUs, and NVIDIA ConnectX-8 SuperNICs, delivering advanced capabilities to accelerate data centers in the AI era. The system also features dual Intel Xeon 6700/6500 CPUs, 32 DDR5 DIMMs, and 3+1 redundant 3200W 80 PLUS Titanium power supplies, ensuring continuous 24/7 reliability essential for modern data center hardware.

Deployment Segment Insights and Analysis:

Based on deployment, the data center interconnect market is segmented into on-premises and cloud. The cloud segment is further sub-segmented into public cloud, private cloud, and hybrid cloud.

Cloud segment is expected to register a fast revenue growth rate during the forecast period due to the rapid expansion of cloud-based services, increasing adoption of hybrid and multi-cloud strategies, and the rising demand for high-capacity, low-latency connectivity. Enterprises are shifting workloads to the cloud to achieve scalability, flexibility, and cost efficiency. It is creating a need for seamless interconnection between geographically dispersed data centers.  Additionally, the growth of data-intensive applications such as AI, IoT, big data analytics, and content delivery networks is pushing cloud providers to invest heavily in DCI solutions.

In July 2025, FNTS, an IT managed services provider, introduced a new cloud platform tailored for High Performance Computing (HPC). It is hosted in its U.S.-based data center and powered by IBM Power technology. FNTS stated that the solution is specifically designed to meet the needs of various industries, including manufacturing, healthcare, financial services, and government. Its industry-focused design attracts sectors such as healthcare, finance, and manufacturing, and boosts the adoption of cloud-based data center interconnect.

End-Use Segment Insights and Analysis:

Based on end-use, the data center interconnect market is segmented into Communications Service Providers (CSPs), Internet Content Providers (ICPs), government, and enterprises. Enterprises segment is further sub-segmented in banking and finance, healthcare, utility and power, media and entertainment, retail & e-commerce and others

Communications Service Providers (CSPs) segment contributed the largest share in 2024 due to the surging demand for high-bandwidth, low-latency connectivity to support cloud services, video streaming, and data-intensive applications. The sharp increase in mobile data consumption, ongoing 5G deployments, and rising edge computing adoption are prompting CSPs to allocate substantial investments toward DCI solutions. They aimed at strengthening network capacity and ensuring smooth interconnection among data centers located across multiple regions.

In August 2024, Wavelo introduced “Free Your Data,” an innovative solution that empowers Communication Service Providers (CSPs) to fast-track their AI initiatives by accessing data locked within legacy BSS/OSS systems. It converts static APIs into dynamic real-time event streams, allowing instant data utilization while eliminating the need for costly system overhauls. This increases demand for scalable, high-capacity interconnect solutions to support faster data exchange across distributed data centers.

Geographical Outlook:

Data Center Interconnect market is strategically segmented by geography to provide a comprehensive understanding of regional market dynamic. Discover demand analysis, emerging trends, and growth opportunities shaping market performance across different region and countries.

North America Data Center Interconnect Market:

Market in North America accounted for largest revenue share in 2024 due to the strong digital infrastructure, rapid cloud adoption, and heavy investments in hyperscale data centers, especially in U.S. and Canada. In June 2025, U.S. data center construction spending hit a record annualized rate of USD 40 billion, driven by tech giants ramping up massive investments in AI infrastructure. The rapid rise of generative AI and machine learning is intensifying the need for greater computing power, leading tech leaders such as Microsoft, Alphabet, and Amazon.com to invest billions in building advanced infrastructure.

These hyperscalers are channeling massive capital into scaling their operations to handle AI workloads, which in turn has significantly benefited semiconductor players like Nvidia, whose data center chips form the backbone of these systems and account for the majority of its revenue. The U.S. government, along with major tech companies, also plans to establish Pennsylvania as a key hub for artificial intelligence data centers, following the announcement of USD 92 billion in new funding. This initiative also highlights natural gas as the primary energy source supporting America’s AI-driven growth. The hyperscale data center construction is directly fueling revenue growth of the market in this region.

Asia Pacific Data Center Interconnect Market:

Asia Pacific is expected to register a fast revenue growth rate during the forecast period due to rapid digital transformation, rising internet penetration, and the expanding adoption of cloud services across the region. Countries such as China, India, Japan, and South Korea are experiencing a surge in data traffic driven by e-commerce, video streaming, mobile applications, and the rollout of 5G networks. For instance, China saw strong growth in both mobile data traffic and overall internet users, with mobile data usage rising sharply and broadband access expanding to 1.136 billion ports by December 2023. This rapid growth in data traffic is fuelling revenue growth of the market in the country, as operators invest in scalable infrastructure to handle rising workloads.

In addition, hyperscale cloud providers and telecom operators in the region are investing heavily in new data center infrastructure to meet the growing demand for AI, IoT, and edge computing. China is building a unified network to commercialize computing power generated from its rapid data center expansion over the past three years. The Ministry of Industry and Information Technology (MIIT), together with state-run telecom giants China Mobile, China Unicom, and China Telecom, is working to establish a centralized platform. This initiative is directly boosting revenue growth of the data center interconnect market in the region by driving large-scale investments in advanced interconnect infrastructure.

Europe Data Center Interconnect Market:

Market in Europe accounted for a significant revenue share in 2024 due to the rapid expansion of cloud computing, digital services, and cross-border data flows across the region. The increasing demand for low-latency connectivity to support AI, IoT, and 5G applications is pushing enterprises, telecom operators, and hyperscale cloud providers to invest in advanced DCI solutions in the region. In September 2025, Scintil Photonics, a France-based photonic SoC startup, raised USD 58 million in Series B funding with Nvidia among the investors. Its Dense Wavelength Division Multiplexing (DWDM) solution, aligned with next-gen co-packaged optics, combines multi-wavelength lasers with silicon photonics to meet the high-bandwidth, low-latency, and dense connectivity needs of AI data centers.

Competition Analysis:

The data center interconnect market is characterized by a fragmented structure, with numerous players competing across various segments and regions. List of major players included in the data center interconnect market report are:

• Ciena Corporation
• Infinera Corporation
• Cisco Systems, Inc
• Nokia Corporation
• Huawei Technologies Co., Ltd
• Juniper Networks, Inc
• Arista Networks, Inc
• ADVA Optical Networking SE
• ZTE Corporation
• A10 Networks, Inc
• Fujitsu Limited
• Extreme Networks, Inc
• Viavi Solutions Inc
• Lumentum Holdings Inc
• Colt Technology Services Group Ltd
• Broadcom

Strategic Developments in Data Center Interconnect Market:

• On 25 February 2025, Broadcom announced the launch of its next-generation interface technology designed for AI data centers. The company introduced its PCIe Gen 6 portfolio, a high-speed data transfer interface between computer systems. In collaboration with Micron Technology (MU) and Teledyne LeCroy, Broadcom successfully tested its high-port switch and retimer to ensure interoperability and compliance, supporting the development of open AI infrastructure solutions.
• On 26 November 2024, HGC Global Communications Limited (HGC) launched a new Data Centre Interconnect (DCI) solution in the Philippines, connecting eight key data centers nationwide. The ICT provider stated that this initiative addresses the rising need for seamless data center connectivity both within the country and across the region. It also aims to boost cloud adoption, content hosting, and the deployment of emerging technologies such as artificial intelligence and cybersecurity.

Key Advantages for Stakeholders:

Navistrat Analytics’ industry report provides an in-depth quantitative analysis of various market segments, historical and current trends, market forecasts, and dynamics within the global market. The historical years covered in this report are 2022 to 2023, with 2024 serving as the base year for market size calculations. The forecast period extends from 2025 to 2032.

The report includes an executive summary and a comprehensive overview of market drivers, restraints, opportunities, and challenges (DROC), along with insights into regulatory standards. It features detailed analyses such as PORTER’s Five Forces, SWOT, and PESTLE, as well as assessments of technological trends and the competitive landscape.

PORTER’s Five Forces analysis helps stakeholders evaluate the impact of new entrants, competitive rivalry, supplier power, buyer power, and substitution threats, enabling them to assess the level of competition and the attractiveness of the global market. The competitive landscape provides stakeholders with a clear understanding of the current market positions of key players, offering valuable insights into their competitive environment.

Scope And Key Highlights of The Data Center Interconnect Market Report:

The Data Center Interconnect market report offers a detailed analysis of market size, including historical revenue (in USD Billion) data for 2022-2023 and revenue forecasts for 2025-2032 across the following segments:

• Component (Revenue, USD Billion; 2022-2032)
  • Hardware
    • Cables
    • Switches
    • Routers
    • Optical DCI
    • Others
  • Software
    • Network Management Software
    • Analytics & Optimization Software
    • Software-Defined Networking (SDN)
    • Others
  • Services
    • Consulting Services
    • Managed Services
    • Professional Services

• Technology Outlook (Revenue, USD Billion; 2022-2032)
  • Synchronous Optical Network (SONET)
  • Dense Wavelength Division Multiplexing (DWDM)
  • Ethernet
  • Fiber Channel
  • Optical Transport Network (OTN)
  • InfiniBand
  • Others

• Bandwidth Outlook (Revenue, USD Billion; 2022-2032)
  • Low Bandwidth (Up to 1 Gbps)
  • Medium Bandwidth (1-10 Gbps)
  • High Bandwidth (10-100 Gbps)
  • Ultra-High Bandwidth (Above100 Gbps)

• Application Outlook (Revenue, USD Billion; 2022-2032)
  • Content Delivery
  • Disaster Recovery
  • Shared data and resources
  • Workload Mobility
  • Data Replication
  • Others

• End-Use (Revenue, USD Billion; 2022-2032)
  • Communications Service Providers (CSPs)
  • Internet Content Providers (ICPs)
  • Government
  • Enterprises
    • Banking and Finance
    • Healthcare
    • Utility and Power
    • Media and Entertainment
    • Retail & E-commerce
    • Others

• Regional Outlook (Revenue, USD Billion; 2022-2032)
  • North America
    • U.S.
    • Canada
    • Mexico
  • Europe
    • Germany
    • France
    • U.K.
    • Italy
    • Spain
    • Benelux
    • Nordic Countries
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • South Korea
    • Oceania
    • ASEAN Countries
    • Rest of APAC
  • Latin America
    • Brazil
    • Rest of LATAM
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Israel
    • Turkey
    • Rest of MEA

Frequently Asked Questions (FAQ) about the Data Center Interconnect Market Report