Data Center Interconnect Market Size

Data Center Interconnect Market Analysis

The Data Center Interconnect Market size is estimated at USD 14.12 billion in 2024, and is expected to reach USD 28.38 billion by 2029, growing at a CAGR of 14.98% during the forecast period (2024-2029).

With the proliferation of data and expansion of technologies like AI and High-Performance Computing (HPC), the need to connect data center assets quickly, reliably, and cost-effectively is growing significantly.

• Factors such as throughput, latency, simplified operations and maintenance, intelligence, and security are becoming significant priorities for data center vendors. This is one of the major factors driving the adoption of Data Center Interconnect (DCI) technology. This is because they can increase bandwidth between data centers, cut down on latency, and stop packet loss.
• The market being studied is getting bigger because of the growing cloud computing industry and the recent rise in OTT service use due to a nationwide lockdown.Moreover, the increasing commercialization of 5G services may further expand the scope of interconnected data center solutions. Autonomous vehicles, smart cities, digital twins, virtual reality, AI virtual assistants, video surveillance and monitoring, and gaming can drive the market's demand.
• The data center interconnection market is growing because more and more people are becoming aware of its many benefits, such as easy access, more convenience, highly encrypted data, connecting with other data segments, and so on.
• The edge computing trend, essential in the 2020 nationwide lockdown scenario, further expands the studied market scope. About 10-15 percent of data is created and processed outside a centralized data center or cloud, but it is expected to reach 60-70 percent by 2025. The hyperscale data centers of Amazon, Google, Equinix, and DRT, are interconnected and stream data and applications over the network to end users. The edge cloud may be a unique ecosystem of open and interconnected data centers.
• The major challenge, especially for small and medium-sized businesses, is the cost of data center connectivity services. A new data center necessitates a significant investment in both construction and maintenance. Furthermore, the distance between data centers is important since it might reduce a data center's efficiency, limiting the growth of the data center interconnect industry.

The COVID-19 outbreak sparked a surge in demand for cloud computing globally. It also expanded the scope of the data center market. Although the data center construction projects witnessed a supply chain disruption due to the labor shortage, it was not expected to delay the completion of several projects. This was only seen in the initial phases. Video streaming and conferencing usage surged beyond expectations, particularly during the nationwide lockdown period, driving up bandwidth demands for networks globally. After the pandemic, the market is currently growing due to rapid digitization and increased 5G services.