News & Insights for the AI Journey|Wednesday, October 16, 2019
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Silicon Switching Shakes Up Datacenter Market 

Recent jockeying within the datacenter networking market underscores the steady shift toward Ethernet-based silicon switching as Intel, Nvidia and others vie to unclog networking bottlenecks and perhaps challenge market leader Broadcom.

Those key silicon vendors along with Arista and Marvell (NASDAQ: MRVL) have all made acquisitions or forged partnerships designed to boost their presence in the datacenter switching market. As a result, IHS Markit is forecasting healthy growth in the Ethernet switching market, with those datacenter components accounting for an estimated 62 percent of all silicon shipments by 2023.

The market tracker notes key networking acquisitions over the last year, including Nvidia’s $6.9 billion deal for Mellanox along with Intel’s response: its June deal to acquire data fabric specialist Barefoot Networks. Indeed, Intel (NASDAQ: INTC) cited the networking acquisition after reports surfaced it was jettisoning plans for a second-generation version of its Omni-Path interconnect.

Also fueling the predicted growth in datacenter switching silicon is Arista Networks (NYSE:ANET), which executed a pair of acquisitions in the last year, including Metomako, an FPGA-based networking specialist. Arista announced its first FPGA for datacenter switching earlier this year based on Metomako’s technology.

Meanwhile, Nvidia’s (NASDAQ: NVDA) acquisition of Mellanox is expected to close by the end of this year, giving the GPU leader an Ethernet and Infiniband networking switch and storage foothold in hyperscale datacenters.

These moves along with the insatiable demand for bigger data pipelines are seen as shaking up the datacenter market as switch vendors transition from proprietary to “merchant” silicon. IHS Markit expects the datacenter market for what it categorizes as “Ethernet switch data-plane forwarding silicon” to jump by a compound annual growth rate of 20 percent through 2023. That increase will be driven by growing demand for programmable silicon, the market tracker said Monday (Aug. 12).

“It’s true that software is still eating the world, but hardware has been revived and has even found new life thanks to technology improvements in silicon and new open designs from organizations like the Open Compute Project Foundation,” said Devan Adams, principal analyst at IHS Markit.

The datacenter survey notes that chip makers are moving to acquire emerging silicon capabilities as hyper-scalers look for ways beyond virtualization and software-defined wide-area networks to boost performance. Thus far, the network switching deals are seen by analysts as “low risk.” But IHS Markit predicts processor vendors like Intel and Nvidia could eventually challenge the likes of Broadcom for supremacy in the datacenter switch market.

Broadcom’s (NASDAQ: AVGO) current leadership position was cemented in 2015 when it was acquired by Singapore-based chip maker Avago in a stock deal valued at $37 billion.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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