Data centre switch market to cross $100 billion by 2027

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Redwood City, USA: Data centre switch market is forecast to grow at a nearly double-digit CAGR between 2022 and 2027, surpassing $100 billion in cumulative spending over the next five years, according to Dell’Oro Group’s new report.

“Although we expect to see some near-term slowdown in revenue growth in 2023, we forecast data centre switch sales to grow high-single-digit to double-digits for every year of our forecast horizon,” said Sameh Boujelbene, VP of Dell’Oro Group.

“Most of the growth will be propelled by Cloud Service Providers (SPs) which are expected to comprise 60% of the data centre switch sales by 2027 and to drive significant adoption of 400 Gbps, 800 Gbps, and 1600 Gbps speeds,” added Boujelbene.

“We expect 400 Gbps and higher speeds to comprise nearly 70% of data centre switch sales by 2027. The proliferation of Artificial Intelligence (AI) workloads will further accelerate this adoption,” expected Boujelbene.

“Nevertheless, as network speeds increase, pluggable optics may reach physical limitations and no longer satisfy thermal and density requirements,” commented Boujelbene.

Therefore, the industry has started to develop alternative solutions, such as CPO (Co-Packaged Optics). CPO is an advanced heterogeneous integration of optics and silicon on a single packaged substrate aimed at addressing next-generation bandwidth and power challenges.

However, CPO adoption will depend on several factors such as whether CPO can bring significant cost and power savings compared to pluggable and customers’ roadmaps and interests.

The data centre switch market forecast report excludes CPO. “Our current forecast for CPO doesn’t show significant volume adoption within our forecast period,” concluded Boujelbene.

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