Data center customers spent significantly on merchant-built server-class Ethernet NICs (including adapters, controllers, and LOMs) in calendar Q2 2024, with total market revenues increasing 40% year-over-year, according to a recent report from Crehan Research. As a result, revenues approached a $5 billion annualized run-rate. Both Foundational/Performance Ethernet NICs and DPU/IPU Ethernet SmartNICs experienced strong year-over-year revenue growth, with increases of over 30% and 50%, respectively. The numerous concurrent Ethernet speed and technology upgrades have been key contributors to this robust market growth (see accompanying chart).
“The current server-class Ethernet NIC landscape is very different than what it was in the past, with a lot more—and a lot faster—upgrade cycles to meet the needs of very diverse customers and workloads,” said Seamus Crehan, president of Crehan Research. “A decade ago, we had three Ethernet speeds, and now we have almost three times that amount, with numerous concurrent upgrades, resulting in a very robust and dynamic market.”
In looking at the Q2 2024 server-class Ethernet NIC vendor results:
• Intel’s Foundational/Performance Ethernet NIC business delivered very strong results, improving on its majority shipment share in this market segment. Furthermore, Intel’s IPU business increased approximately 50% sequentially, as it continued to hold the top shipment and revenue share position in the merchant-built DPU/IPU/SmartNIC category.
• Broadcom also saw strong growth in the Foundational/Performance Ethernet NIC market. Its Thor 2 AI-optimized NICs are expected to drive further growth starting in the second half of 2024.
• Nvidia posted robust growth in the DPU/IPU/SmartNIC market, driven by the strength of its BlueField AI deployments.
“The emergence of the AI server networking opportunity has the potential to drive significant Ethernet NIC market share shifts as we see faster upgrades, sudden technology shifts, and new customers emerge,” Crehan added.
