Data Center Interconnect Market Analysis

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.