Data Center Interconnect Market - By Component (Hardware, Software, Service), By Technology (Optical Networking, Ethernet DCI, Wavelength Division, Multiplexing (WDM), IP/MPLS), Application, End User, Forecast 2023 – 2032

Data Center Interconnect Market Size

Data Center Interconnect Market size was valued at USD 8.2 billion in 2022 and is projected to grow at a CAGR of over 13.5% between 2023 and 2032. The exponential growth of data generated by trends, such as IoT and big data analytics, is a primary factor propelling the data center interconnect industry. As businesses and organizations accumulate vast amounts of data, they require interconnected data centers to efficiently manage, process, and store this information. Data center interconnect solutions enable seamless communication and data transfer between these data centers, ensuring data availability & reliability, and addressing the pressing need to accommodate & harness the ever-increasing data volumes.
 

The increasing demand for disaster recovery solutions is a significant factor fueling the data center interconnect market. Organizations recognize the critical importance of data continuity and minimizing downtime in events of disasters or system failures. Data center interconnect enables the replication and synchronization of data between geographically dispersed data centers, ensuring redundancy and data availability. This resilience is crucial for disaster recovery strategies as it allows for seamless failover to secondary data centers, reducing the risks of data loss and business disruption. As such, the growing emphasis on disaster recovery is fueling the adoption of data center interconnect solutions.
 

COVID-19 Impact

The COVID-19 pandemic had mixed impacts on the data center interconnect industry. On one hand, it accelerated the shift toward digitalization and remote work, increasing the demand for data center capacity. However, on the other hand, lockdowns & restrictions disrupted renovation projects due to supply chain disruptions and labor shortages. Organizations prioritized balancing their immediate needs for digital infrastructure, leading to varying effects on the pace of data center interconnect activities.
 

Data Center Interconnect Market Trends

The proliferation of data centers is creating lucrative growth opportunities for the data center interconnect industry. With the ever-increasing demand for cloud services, IoT, and data-intensive applications, organizations are building more data centers. For instance, in July 2023, Reliance Industries unveiled plans to join forces with Mercury Holdings SG Pte, an established joint venture already involving Brookfield Infrastructure and Digital Realty, to develop data centers in India. Under this partnership, Reliance Industries will assume an equal 33.33% stake in the existing joint venture. These data centers will have robust connectivity, linking vital terrestrial infrastructure and undersea cables, thereby serving as vital entry points for multiple enterprises seeking access to the Indian market.
 

Data Center Interconnect Market Analysis

Based on the component, the data center interconnect market is categorized into hardware, software, and service. The hardware segment is expected to grow at a CAGR of around 12.5% during the forecast period. The introduction of new high-speed optical transceivers is driving significant growth in the hardware component segment. These transceivers, with surging data transmission rates, enhance the capacity & efficiency of data center interconnect infrastructure. For instance, in August 2023, Marvell Technology, Inc., a prominent provider of semiconductor solutions for data infrastructure, unveiled COLORZ 800, a series of pluggable modules with an 800 Gbps capacity. These modules mark a significant milestone in the industry, offering an innovative solution for swiftly, cost-effectively, and efficiently expanding Data Center Interconnects (DCIs) to meet the demands of the AI-driven era.
 

Based on end users, the data center interconnect market is divided into communications service providers (CSPs), internet content providers & carrier-neutral providers (ICPs/CNPs), government, and enterprises. The communications service providers (CSPs) segment was valued at over USD 2.3 billion in 2022. Network expansion is a prominent factor contributing to the expansion of communications service providers (CSPs). CSPs are continually extending their network infrastructure to accommodate the escalating demand for fast & reliable data transmission. This expansion includes the construction or enhancement of data centers, which require robust data center interconnect solutions to connect them efficiently. By expanding their network footprint and ensuring seamless data connectivity, CSPs can better serve customers' ever-growing connectivity needs and maintain competitiveness in the telecommunications industry.
 

North America held a dominant data center interconnect market share of over 35% in 2022. The increasing trend of acquiring DCI portfolios is boosting the North America DCI market growth. Companies are strategically acquiring DCI solutions to expand their service offerings, enhance network capacity, and meet the growing demand for high-speed, reliable data connections. For instance, in June 2023, KDDI signed a definitive purchase & sale agreement with Allied Properties REIT, involving the acquisition of its data center division for USD 1,037.7 million. Recognizing the data center business as a vital component of digital transformation (DX), KDDI intends to broaden its interconnection data center network. These data centers serve as hubs where various stakeholders including content providers, cloud service providers, and telecom carriers converge, fostering collaborative value creation and innovations.
 

Data Center Interconnect Market Share

Major players operating in the data center interconnect market are:

• Cisco Systems
•  Equinix
•  Extreme Networks
•  Fujitsu
•  Huawei Technologies Co., Ltd.
• Juniper Networks
•  NOKIA
•  Cisco Systems Inc.
• Equinix
   

are dominant players in the global market, holding over 10% of the revenue share. These companies are significantly contributing to market expansion and advancement. They are offering innovative products, solutions, and services that are helping businesses of all sizes build and manage their next-generation data center networks.
 

Data Center Interconnect Industry News

• In September 2023, IONOS, Europe's largest web hosting company, implemented Infinera's GX Series Compact Modular Platform to bolster its network infrastructure and establish dependable, high-capacity, and high-performance connectivity services, facilitating interconnections between data centers across Europe.
   

The data center interconnect market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2018 to 2032, for the following segments:

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By Component

• Hardware
  • Optical transceivers
  • Switches & routers
  • Cables & connectors
  • Optical amplifiers
  • Others
• Software
  • Software-defined Networking (SDN)
  • Network management software
  • Analytics & optimization software
  • Others
• Services
  • Professional
  • Managed

By Technology

• Optical networking
• Ethernet DCI
• Wavelength Division Multiplexing (WDM)
• IP/MPLS

By Application

• Disaster recovery
• Content delivery
• Data replication
• Load balancing
• Cloud connectivity

By End User

• Communications Service Providers (CSPs)
• Internet Content Providers & Carrier-neutral Providers (ICPs/CNPs)
• Government
• Enterprise
  • BFSI
  • Healthcare
  • Media & entertainment
  • Others 

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Spain
  • Poland
  • Benelux
• Asia Pacific
  • China
  • India
  • Japan
  • Singapore
  • Australia
  • South Korea 
• South America
  • Brazil
  • Argentina
  • Chile
  • Colombia
• MEA
  • UAE
  • Saudi Arabia
  • South Africa