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

July 24, 2023
The rise of Artificial Intelligence (AI) applications will become a catalyst for growth.

New generative AI applications will be a significant driver of Ethernet data switch sales. According to a new Dell’Oro Group report, 20 percent of Ethernet Data Center Switch ports will be connected to accelerated servers to support Artificial Intelligence (AI) workloads by 2027.

As a result, the research firm contends that AI applications will drive the data center switch market will exceed $100 billion in cumulative sales during the next five years.

“We anticipate an outstanding market performance for 2023, marking the third successive year of double-digit growth and a new sales record,” said Sameh Boujelbene, VP of 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 a swift rebound, with sales returning to double-digit growth throughout our forecast horizon.

Enhancing the speeds carried in data centers will continue to be a factor during the forecast period. Dell’Oro expects nearly half of the data center switch ports will be driven by 400 Gbps speeds and higher by 2027. By 2025, 800 Gbps is expected to eclipse 400 Gbps.

Additionally, the research firm expects SONiC to accelerate, achieving a 10-20 percent penetration rate in Tier 2/3 Cloud service providers and large enterprises by 2027.

Boujelbene said Dell’Oro’s market forecasts don’t consider emerging generative AI applications and Large Language Models (LLMs). “These groundbreaking AI applications necessitate a distinct AI network known as the back-end network, which serves as the infrastructure to connect all accelerated servers. This back-end network differs from the front-end network used to connect general-purpose servers, which is the main scope of this current Ethernet data center switch report.”

He added, “Our future research will focus on tapping into the market potential driven by back-end networks that leverage a blend of Ethernet and InfiniBand technologies.”

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About the Author

Sean Buckley

Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.

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