Dell'Oro said it expects market revenue for DWDM equipment to reach $18 billion by 2028.
The emergence of coherent DSPs capable of delivering wavelength speeds of over 1 terabits per second is expected to drive market growth over the next five years.
Jimmy Yu, vice president at Dell'Oro, said: "We expect that the new generation of coherent DSPs capable of reaching terabit speeds will accelerate growth over the next five years, and by 2028, we expect more than half of the DWDM market revenue to come from 1.2 Tbps and 1.6 Tbps Line card shipments. These new line cards will bring 400 Gbps wavelength to ultra-long distance applications spanning thousands of kilometers and 800 Gbps wavelength elsewhere."
The demand for DWDM long-haul equipment is expected to grow faster than metro equipment and contribute a higher market revenue share in the future.
Shipments of coherent wavelengths at terabits per second speeds are expected to grow at a compound annual growth rate of 200% over the next five years.
By 2028, baud rates above 100 GHz will account for more than 40% of new installations. High baud rates will reduce the total number of wavelengths per fiber, but larger channels will provide better performance and longer coverage while reducing costs.