LightTrends Newsletter

LightCounting releases a new report on Ethernet switching ASICs

Demand for Ethernet switches from Cloud companies created a new market segment for very high bandwidth switches and switch ASICs. It also transformed the industry supply chain as Cloud companies started using internally designed Ethernet switches and opening these “white box” designs to a broader community.

Recognizing this change, Cisco adopted a new business model, offering disaggregated hardware, software, switching ASICs and optics to end users. Intel, Marvell and Nvidia are also challenging the dominance of Broadcom in the merchant switch ASIC market.

This new report presents an estimate of the current market size and 5-year forecast for sales of high-bandwidth (12.8T and above), low latency switch ASICs to Cloud companies. Figure E-1 shows a summary of the report findings. It illustrates that this market segment is modest in size (under $300 million in 2021), but it is projected to grow at 19% CAGR in 2022-2027. What makes it even more interesting is the potential opportunity for switching ASIC with co-packaged optics (CPO). Assuming that only 15% of 25.6T and 51.2T switch chips will have 50% of their ports equipped with CPO in 2027, the market size will almost double from $900 million to $1.6 billion.

LightCounting developed a new methodology for forecasting demand for switching ASICs using projections for growth in data traffic within Cloud datacenters, instead of relying on estimates for future shipments of servers (used by the industry now). This approach has worked well for LightCounting’s optical transceiver market forecasts and we expect it to provide a reasonable reference point on the market for switching ASICs as well.

More information on the report is available at Market Reports