LightTrends Newsletter

Ethernet switch ASICs for Cloud datacenters to double in 5 years

October 2022

By Vlad Kozlov

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.

LightCounting’s report on Ethernet switch ASICs was first published in April 2022, and today the first update has been released. The report covers the most interesting segment of the switching ASIC market – high bandwidth (3.2T and above), low latency chips deployed in Cloud datacenters. The report offers brief profiles of the leading suppliers of merchant switch ASIC and system integrators, offering products to Cloud companies, and includes a forecast for sales of 3.2 to 51.2T switch ASICs.

The updated report now includes 3.2T/6.4T chips in addition to the higher speed products. This change added close to $1 billion to the total market size compared to our April estimate. The forecast includes chips sold in the merchant market as well as chips used by Cisco in their own equipment (captive market). A lower forecast for 2023 compared to our April 2022 edition reflects reduced guidance by the leading Cloud companies for datacenter upgrades planned for next year. Despite a reduced forecast, the overall market is expected to roughly double in size from $1.8 billion in 2023 to $3.6 billion in 2027.

One scenario discussed in the report considers the adoption of co-packed optics (CPO) in 25.6T and 51.2T Ethernet switches by Cloud companies. Assuming that 15% of 25.6T and 51.2T switch chips will have half of their ports equipped with CPO adds $500 million to the market size in 2027, increasing it from $2 billion to $2.5 billion. The impact of CPO adoption is not as significant as we estimated in the first edition of this report published in April 2022, because of revised assumptions on pricing of switching ASICs.

The full 60-page report and accompanying spreadsheet model are now available for download via LightCounting’s client portal.

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