Driven by growing requirements for back-end Ethernet server connectivity to support the scale of AI server clusters, Dell'Oro Group raised its forecast of the Ethernet Adapter and Smart NIC to exceed $16 billion by 2028.
The research firm's market outlook changed significantly due to strong requirements for back-end Ethernet server connectivity to support the scaling out of AI server clusters.
Dell’Oro’s total Ethernet Adapter and Smart NIC market, including server connectivity for front-end and back-end networks, is projected to grow at a 27 percent compound annual growth rate by 2028.
Back-end networks dominate
Dell’Oro said that back-end networks will dominate as generative AI continues to ramp up.
To maintain pace with compressed GPU accelerator roadmaps, server access speed for back-end networks will be at least one generation ahead of front-end networks.
Likewise, intelligent NICs, which include DPUs and IPUs, are positioned for high growth to support the intense demands of back-end Ethernet-based networks.
Smart NICs are programmable accelerators that make data center networking, security, and storage efficient and flexible. These devices can enhance networking, storage, and security functions, balance the load, and perform visualization.
Hyperscale providers like AWS, Google and Microsoft have used smartNIC technology to optimize the performance of their data center servers.
A new role
Baron Fung, senior research director at Dell'Oro Group, said that the advent of generative AI applications is changing the role of Ethernet adapters.
"The advent of generative AI applications is driving the demand to interconnect accelerated servers with a back-end Ethernet network necessary for training large language models,” he said. “This is a new market opportunity for Ethernet adapters, with significantly higher growth than the traditional front-end Ethernet adapter market.”
Additionally, Fung said that Ethernet-based products will overtake InifiBand-based platforms in the back-end network.
"While the back-end network market today is predominantly InfiniBand-based today, Ethernet-based solutions are forecast for broad adoption as customers seek a multi-vendor solution," he said.
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