Coherent optics are pluggable transceiver modules that use coherent transmission, varying both the amplitude and the phase of light, plus digital signal processing, to carry very high data rates over kilometer-scale distances. ZR and ZR+ are the industry’s naming for coherent pluggable reach classes. Data center interconnect (DCI) is what they build: the links between data centers, campuses and AI sites that have become a first-order part of AI infrastructure budgets.
Which Pluggable for Which Reach?
It depends on the distance you need to cover. Inside the building, direct-connect modules handle the short hops. Up to 10 km, a single 800G Coherent Lite wavelength carries traffic without amplification, which is why it is the volume workhorse of the AI build-out. Across a metro, ZR-class modules carry the load, with a third generation entering the market at 800 Gbps. Between cities, ZR+ pushes to 1000 km. We published the volumes behind each class: the Coherent Lite market is set to top 10 million units within three to five years (see the press release), and the ZR market is set to exceed one million DSPs annually (see Today’s Distributed Hybrid AI Requires Investments in AI Fabrics, DCI WAN and Security).
Why Is AI Driving Coherent Demand?
AI factories no longer fit in one building. Training jobs span campuses and regions, gradient traffic runs between sites, and the WAN build-out that carries it leans on coherent pluggables rather than purpose-built transport boxes for the short reaches. As of October 2026, we project AI networking approaches $100B a year by the end of the decade, and DCI is one of the fastest-growing slices of it. The pace shows up in capacity: the industry now ships more networking capacity in a single quarter than it shipped in the entire prior year, and long-haul routes are where coherent optics earn their keep.
What Happened to Metro vs Long-Haul?
The substitution is already visible in transport: the metro portion of the optical transport market declined in 1Q25 while long-haul grew (see our optical transport press release). The reason is straightforward: coherent pluggables that live inside Ethernet switches and routers replace purpose-built metro systems, and AI traffic is concentrating on the longer reaches that pluggables are reaching as each generation lands.
How Do Coherent Optics Differ from the Optics Inside the AI Factory?
Inside the AI factory, the optics story is about reach of meters to a few hundred meters: 800G optical transceivers led the AI networking surge, with record levels of 800 Gbps ports and optics across 2024 and 2025 (as of our June 2024 forecast, press release). Those intra-data-center modules use direct-detect and PAM4 signaling. Coherent optics take over where distance, dispersion and amplification start to matter, and the two worlds converge in the 1.6T cycle as new form factors and co-packaged designs blur the boundary (see What Are CPO, NPO and Lasers? and What Is Optical Circuit Switching (OCS)?).
How Was This Calculated?
The figures in this Explainer come from 650 Group’s published quarterly research on optical transport, coherent pluggables and AI networking, which track unit shipments and revenue by reach class each quarter. Each figure links to its publication, and the full catalog is on our research reports page.
What to read next: our DCI WAN architecture analysis for the network design, and The $1 Trillion Dollar Networking Market for the long-range view. Optical updates land in our optical category.