Can Ethernet Keep Up with InfiniBand? 2023 Market Trends and Forecast

Based on the original article "InfiniBand, can it shake Ethernet?", the author examines whether the surge in AI system investments will cause InfiniBand interconnect sales to overtake high‑end Ethernet in data centers. The conclusion is that this will not happen; both technologies can grow side by side.

IDC Market Data Overview

IDC reports that large‑scale enterprises, cloud builders, and many HPC centers have already deployed 200 Gb/s and 400 Gb/s networks, allowing both InfiniBand and Ethernet markets to expand. Ethernet remains ubiquitous across edge, campus, and data‑center environments, making it essential to separate data‑center Ethernet switch sales from other segments.

In Q3 2023, IDC observed a 7.2% year‑over‑year (YoY) increase in data‑center Ethernet switch sales. Although not explosive, this reflects steady growth as port prices fall and throughput rises. IDC did not publish revenue figures, but the author’s calculations estimate $4.8 billion in data‑center Ethernet switch revenue, representing 41% of total Ethernet switch sales.

IDC stopped publishing port growth rates by type and speed after Q4 2022, so the author estimated that 32.1 million ports were shipped to data centers in Q3 2023, a 20.3% YoY increase and a 24.5% quarter‑over‑quarter (QoQ) rise.

InfiniBand vs. Ethernet Revenue

Nvidia’s InfiniBand revenue grew five‑fold in the most recent quarter. Over the past 12 months the author’s model estimates a 3.2× increase to $5.53 billion (including switches, NICs, DPUs, cables, and software). By contrast, the annualized run‑rate for the data‑center Ethernet switch market is about $20 billion. Assuming InfiniBand captures roughly half of that market, Ethernet still outsells InfiniBand by a factor of about seven.

In the non‑data‑center Ethernet segment (campus, edge), sales grew faster, with a 22.2% YoY increase and a 36.5% YTD rise, reaching $6.9 billion and roughly 250 million ports shipped.

Vendor Share Breakdown

ODM manufacturers account for 14.7% of data‑center Ethernet sales, amounting to $705 million in the quarter (7.4% YoY growth). Cisco derives 72.2% of its Ethernet revenue from outside the data center, leaving only 27.8% (about $1.48 billion) from data‑center switches. Arista holds a 10.6% market share with $1.14 billion in data‑center sales. HPE’s Aruba contributes 8% ($730 million) of data‑center Ethernet revenue, partly from the “Rosetta” Slingshot variant for HPC and AI clusters.

Cisco has successfully protected and expanded its data‑center switch business, growing 12.9% YoY, while overall Ethernet switch growth is 7.2%. Arista’s data‑center growth is roughly three times the market average at about 20%. ODMs are also gaining pace. Excluding Cisco, Arista, and ODMs, the remaining market would shrink 5.4% to $1.48 billion.

Speed‑Grade Trends and Pricing

In data centers, 200 Gb/s and 400 Gb/s Ethernet switch sales surged 44% YoY, with port shipments up 63.9%. Meanwhile, 100 Gb/s Ethernet switch sales grew 6% across data‑center, edge, and campus environments. The author includes pricing trend lines (see images) that illustrate these dynamics.

Key Observations

Even though competition is fierce, Cisco’s strategic focus on data‑center switches and campus upgrades has yielded strong growth. Arista’s growth rate is nearly triple the market average. The broader server market outside AI clusters is in decline, yet Ethernet upgrades continue at a moderate pace, underscoring the increasing importance of networking in data centers despite supply‑chain constraints.

Overall, the data‑center, campus, and edge Ethernet switch market reached $11.7 billion in Q3 2023, a 15.8% YoY increase, while the associated Ethernet router market fell 9.4% to just under $3.7 billion.