Report: Merchant silicon will dominate data center switch market

IHS Markit's latest report predicts that merchant silicon shipped in data center Ethernet switches will account for 63% of all units shipped in 2022. (Pixabay)

White box and traditional switch vendors are driving the use of merchant silicon in data switches to new heights, according to a report.

A report this week by IHS Markit predicts that merchant silicon shipped in data center Ethernet switches will reach 63% of all units shipped in 2022. Proprietary and custom silicon will top 30% by 2022 while programmable silicon is expected to account for 7%.

In the third quarter of last year, data center Ethernet switch revenue was close to $3 billion, which was a 3% increase year-over-year, while ports revenue was $15 million, which was up 10% year-over-year.

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Broadcom is still the undisputed king in merchant silicon with chips present in all segments of the market from general purpose and purpose-built to bare metal switches and in all port speeds from 1GE to 400GE.

“Proprietary or custom silicon vendors are mainly traditional switch vendors, but many are expanding their portfolios to include nonproprietary third-party commodity silicon," said IHS Markit's Devan Adams, principal analyst, cloud and data center switching, in a prepared statement.

Adams cited the merchant silicon that is being used in Cisco's 3400 series data center switches and Arista Networks' use of Broadcom’s Tomahawk 3 merchant silicon for its two 400GE switches as proof of the move to merchant silicon. Arista Networks and Cisco both announced 400GbE switches in October. Juniper Networks has announced its QFX5220 switch, which is based on Broadcom merchant silicon.

RELATED: Arrcus' OS makes the jump to 400G white box switches

Arrcus announced last month that its operating system now runs on Broadcom’s StrataXGS Tomahawk 3 silicon for 400G white box switches from Celestica and Edgecore Networks.

IHS Markit forecasts that bare metal switches will account 30% of all ports shipped by 2022. Bare metal switch shipments will continue their long-term growth due to use by hyperscale and Tier II cloud service providers, telcos adopting NFV and large enterprises deploying a mix of bare metal switches with merchant data plane silicon from Broadcom or programmable chips from Marvell-owned Cavium or Barefoot Networks.

“Branded bare metal switches with Broadcom silicon offering 10GE+ port speeds are proving to be a credible alternative to traditional switches; plus, telcos deploying NFV are increasing their adoption of bare metal switches as they transform their networks to include mini-data centers in their central offices," Adams said.

The report also said that software-defined enterprise WAN revenue increased 23% from the second quarter of last year to the third while ADC revenue increased 2% over the same time frame but decreased 3% year-over-year from the third quarter of 2017.

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