800G data center switch ports to top 400G by 2025: Dell’Oro

Half of data center switch sales over the next five years will feature ports at 400G or greater, according to a new report from Dell’Oro Group. Against an overall backdrop of data center switch sales growth, 800G ports will become pass 400G in demand by 2025, the market research firm says in Ethernet Switch – Data Center 5-Year July 2022 Forecast Report.

The availability of 800G optics and 25.6T chips has already created a demand for 800G switch ports, according to Dell’Oro. While Google is the first to adopt 800G ports, other cloud service providers such as Meta and Microsoft are expected to follow Google’s example. And as such hyperscalers evolve their networks toward higher speeds, the market can expect them to make distinct choices in terms of chip capacity, switch radix, and network topology, according to Dell’Oro. These high-speed ports will be filled with pluggable optics in the vast majority of cases, although use of co-packaged optics will begin to grow toward the end of our forecast period, the market research firm believes.

Meanwhile, Dell’Oro expects the data center switch space to expand by a nearly double-digit CAGR between 2021 and 2026, approaching $100 billion in cumulative spending. "Given the strong bookings and unprecedented levels of backlogs, we expect the demand in the market to remain strong in 2022 but sales performance will be determined by the supply environment," said Sameh Boujelbene, senior director at Dell’Oro. "However, as we look into 2023, concerns started to arise regarding the sustainability of the demand level in the market. Those concerns are fueled by increased macro-economic uncertainties, which, combined with potential improvements in the supply situation, may put a break on the panic purchasing behavior we are currently experiencing in the market.

"Although we may see some slowdown in revenue growth in 2023, due in part to a tough comparison with 2022, we expect the data center switch market to remain, for the most part, resilient to these macro-economic headwinds as the pandemic has amplified the importance of the network and accelerated digital transformation initiatives. Additionally, our interviews with value-added resellers and system integrators revealed that many vendors have implemented some sort of non-cancellation policy for their orders which should provide confidence in a strong revenue outlook, at least through the first half of next year.

"Another reason that underpins our optimism about the long-term health of the market is the portion of spending driven by cloud service providers (SPs). Cloud SPs are projected to comprise 60 percent of the spending on data center switches by 2026 and to drive the adoption of 400-Gbps, 800-Gbps, and 1600-Gbps speeds," Boujelbene concluded.

Dell’Oro’s Ethernet Switch – Data Center 5-Year Forecast Report provides an overview of market trends and includes tables covering manufacturers’ revenue, port shipments, and average selling price forecasts for various technologies: modular and fixed by port speed and fixed managed and unmanaged by port speed. The company forecasts the following port speeds: 1/10/25/40/50/100/200/400/800/1600 Gbps.

For related articles, visit the Business Topic Center.

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.

To stay abreast of optical communications technology, subscribe to Lightwave’s Enabling Technologies Newsletter.