After two quarters of decline, the branded data center Ethernet switch market rebounded strongly in Q3 2024, achieving a 7% year-over-year increase in total revenues, the highest quarterly level on record, according to Crehan Research. A driving factor behind this growth was the rapid deployment of 800 gigabit Ethernet (GbE) switches, which are increasingly being adopted to support AI compute clusters. This marks the fastest ramp-up for any data center Ethernet switch speed to date, signaling a significant shift in networking technology.
Seamus Crehan, president of Crehan Research, highlighted the significance of the rebound, noting that “the market’s year-over-year revenue growth is particularly impressive, considering the lingering backlog order fulfillment from pandemic-induced supply chain constraints.” Crehan also emphasized the role of generative AI in spurring demand for high-speed Ethernet networking, as cloud providers scale up to meet the bandwidth needs of these data-intensive workloads. Complementing the rise of 800GbE, shipments of 400GbE NICs saw an extraordinary six-fold growth year-over-year, driven by foundational NICs and DPUs/IPUs.
• Market Growth: Branded data center Ethernet switch revenues grew 7% YoY in Q3 2024, reaching record levels.
• 800GbE Adoption: Rapid adoption of 800GbE switches supports AI compute clusters and sets a record for the fastest switch speed ramp.
• AI Impact: Generative AI workloads are driving significant investments in high-speed Ethernet networking.
• NIC Growth: 400GbE NIC shipments surged six-fold YoY, propelled by demand for both foundational and advanced data processing units (DPUs/IPUs).
• Supply Recovery: Growth is noteworthy given the market recovery from pandemic-related supply constraints a year ago.