In our latest market outlook report, single-mode and multimode fiber optic cable products will see significant consumption growth in cloud data center and AI data center applications in all regions of the world. With the recent announcement of the US $500 billion Stargate program and the success of China's DeepSeek big language AI model, CRU remains extremely optimistic about the growth of data center cable demand in the future. Below is a detailed description of the project's methodology and key results. The AI boom drives global data center cable demand generation AI terminal applications and data center construction have become a hot topic around the world, and investment in this field has increased significantly since January 2019. From July 2019 to July 2024, data center construction spending in the United States increased by about 210%. This trend translates into explosive growth in fiber optic cable demand, as a large number of optical cables are required for connections within and between data centers for high-speed and low-latency data transmission.
Through cooperation with LightCounting, a market analysis agency specializing in optical transceiver market research, we can convert historical and forecasted optical transceiver shipment data into specific optical cable demand in core kilometers. Using these shipment data, we considered different factors such as maximum transmission distance, percentage of actual distance used, number of fibers and average wavelength (used for data conversion in dense wavelength division multiplexing [DWDM] transceivers). After applying all variables, we arrived at the final result of total single-mode fiber (SMF) and multimode fiber (MMF) core-kilometer distance demand for optical cables (and a small amount of copper data lines) in Ethernet transceiver cables, DWDM transceiver cables, active optical cables (AOCs), active electrical cables (AECs) and direct-attached copper (DAC) transceivers. The data is also grouped by AI applications, non-AI applications and data center interconnect (DCI) applications. CRU predicts that optical cable consumption for AI applications will increase by 138% in 2024 and will increase by nearly 80% in 2025. High-speed data transmission requires optical cable and DWDM options Single-mode fiber is the main choice for connecting decentralized servers inside the data center and interconnecting between external data centers. These high-capacity DCI links sometimes require the use of DWDM technology, which transmits multiple data streams simultaneously using different wavelengths over a single fiber, significantly increasing bandwidth capacity. Several emerging trends are shaping the future of fiber optic cable use in data center environments. One notable trend is the migration to 400G and 800G and even 1.6T ultra-large computing power solutions, driven by the growing demand for computing power for artificial intelligence and cloud computing. The emergence of DeepSeek may reduce the demand for computing power in the short term, but we believe that the trend of computing power growth will remain unchanged in the medium and long term.
Single-mode fiber is critical in realizing these high-speed data networks, especially for ultra-large data centers that require long-distance, high-bandwidth connections. Silicon photonics is also gaining attention, and by integrating optical and electronic components on a single chip, it is expected to continue to reduce the cost and power consumption of high-speed optical transceivers. In addition, OM5 fiber, as a newer generation of multimode fiber, supports multiple wavelengths on a single fiber, allowing higher data rates and extending the feasibility of multimode fiber in future short-distance, high-speed connections. These technological advances are paving the way for more efficient, scalable and cost-effective fiber optic cable solutions in data centers, enabling them to meet the growing needs of the digital economy. AI applications are the main driving force behind the growth of global data center optical cable demand. Overall, the outlook for data center optical cable demand remains strong, driven by the rapid expansion of AI applications and the corresponding significant increase in data transmission needs. Single-mode fiber will continue to dominate long-distance, high-capacity connections, especially as data centers migrate to 400G, 800G and 1.6T solutions. The continuous advancement of OM4 and OM5 multimode fiber technology will also continue to improve efficiency while reducing costs, making it continue to occupy an important place in short-distance data transmission scenarios.
CRU's optical cable demand analysis results are divided into three main categories - AI applications, non-AI applications and data center interconnect (DCI). In 2024, the optical cable demand for AI applications achieved the highest year-on-year growth rate of 138%. In addition, in 2025, the optical cable demand for AI applications is expected to continue to far exceed that of non-AI applications at a year-on-year growth rate of 77%, and the five-year compound annual growth rate (CAGR) is expected to be 26% by 2029. The industry is expected to continue to expand as data centers evolve to meet the needs of the escalating digital economy. The combination of DWDM technology and next-generation fiber will play a key role in supporting the exponential growth in data traffic while enabling more cost-effective and energy-efficient connectivity solutions.