According to the latest report from market research firm Dell'Oro, the next generation of terabit-level DSP chips will help the DWDM equipment market reach a market size of $18 billion over the next five years. Jimmy Yu, VP at Dell'Oro, the report's author, points out that these terabit-level DSPs will be applied in various networks, from super data centers to small and medium-sized telecom operators. Some users employ them for single-wavelength 1Tbps transmission, while others utilize them for longer-distance transmissions.
Jimmy Yu specifically notes that Chinese operators will adopt these chips for achieving 400Gbps ultra-long-distance transmission, while more operators will use them for 800Gbps applications at shorter distances. Over the next five years, over half of the added capacity will be driven by DWDM systems based on the sixth-generation coherent DSP.
Last year, Dell'Oro indicated that demand for optical transport equipment would exceed $83 billion in the next five years, primarily driven by coherent DWDM devices in metropolitan and long-distance DCI applications, where long-haul devices might contribute more significantly to the overall market.
Some companies have already started rolling out Tbps-level optical equipment. In September of last year, Cisco was the first to introduce the new NCS 1014 C-band 2.4T WDM line card, collaborating with Windstream to achieve 1Tbps transmission over 1100 kilometers. Ciena also announced plans to launch the WaveLogic 6 chip, supporting 1.6Tbps 1000km transmission, in the first half of 2024. By 2028, it is expected that more than half of DWDM equipment sales will come from 1.2Tbps and 1.6Tbps line cards. These line cards can support higher transmission capacity, thereby reducing the cost per bit, having lower per-bit power consumption, and supporting a more sustainable future.
Dell'Oro also predicts that high baud rate transmission will become increasingly prevalent. By 2028, systems with baud rates exceeding 100GHz will account for over 40% of new deployments. High baud rates offer higher performance, longer distances, lower costs, and will also result in more usage of the C+L band, as the introduction of high baud rates will reduce the available channels in the traditional C band.