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Ethernet data center switch sales to exceed $100 billion by 2027

Release time:

2023-08-25

Ethernet data center switch sales to exceed $100 billion by 2027

New generative AI applications will be an important driver of Ethernet data switch sales. According to a new report from the Dell'Oro Group, by 2027, 20% of Ethernet data center switch ports will be connected to acceleration servers to support artificial intelligence (AI) workloads.

As a result, the research firm believes that AI applications will drive the data center switch market to more than $100 billion in cumulative sales over the next five years.

"We expect the market to perform well in 2023, with a third consecutive year of double-digit growth and a new sales record," said Sameh Boujelbene, vice president of the Dell'Oro Group." "While challenges such as backlog normalization, data center capacity digestion, and spending optimization may temporarily impact market growth in 2024, we expect the market to rebound rapidly, with sales returning to double-digit growth over our forecast period.

Increasing data center velocity will continue to be a factor during the forecast period. Dell'Oro expects that by 2027, nearly half of all data center switch ports will be powered by 400 Gbps and beyond. By 2025, 800 Gbps is expected to exceed 400 Gbps.

In addition, the research firm expects SONiC to accelerate to achieve 10-20% penetration among 2/3 cloud service providers and large enterprises by 2027.

Boujelbene said that Dell'Oro's market forecasts did not take into account emerging generative artificial intelligence applications and large-scale language models (LLM). "These breakthrough AI applications require a unique AI network, called a back-end network, as the infrastructure to connect all the acceleration servers. This back-end network is different from the front-end network used to connect common servers, which is the main scope of the current Ethernet data center switch report."

He added: "Our future research will focus on exploring the market potential driven by a back-end network of hybrid Ethernet and InfiniBand technologies."

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