Why Ethernet Still Beats InfiniBand in Data Centers: 2023 Market Insights

Introduction

It is commonly assumed that the boom in AI investments will cause InfiniBand interconnect sales to cannibalize high‑end Ethernet sales in data centers, but the reality is quite different.

IDC Data Overview

According to IDC's latest market research, hyperscale cloud builders, large enterprises, and some HPC centers have already deployed 200 Gb/s and 400 Gb/s networks, allowing both InfiniBand and Ethernet markets to grow simultaneously.

Ethernet is ubiquitous—present at the edge, campus, and data center—whereas InfiniBand is specialized for data‑center use. Distinguishing data‑center Ethernet switch sales from other Ethernet sales is therefore essential.

Q3 2023 Ethernet Switch Sales

IDC reports that data‑center Ethernet switch sales grew 7.2% YoY in Q3 2023, reaching $4.8 billion, which is 41% of total Ethernet switch sales. Port shipments are estimated at 32.1 million, a 20.3% YoY increase and a 24.5% QoQ rise.

InfiniBand vs. Ethernet Scale

Nvidia’s InfiniBand revenue surged five‑fold in the last quarter; our model estimates a 3.2× increase to $5.53 billion (including switches, NICs, DPUs, cables, and software). However, the data‑center Ethernet market still runs at roughly $20 billion annually, making Ethernet switches about seven times larger than InfiniBand switches.

Non‑Data‑Center Ethernet Growth

In the non‑DC segment—campus upgrades and edge deployments—sales grew 22.2% QoQ, amounting to $6.9 billion for the year, with an estimated 250 million ports shipped at various speeds.

Overall Market Size

Combined DC, campus, and edge Ethernet switch market reached $11.7 billion in Q3 2023, a 15.8% YoY increase. The complementary Ethernet router market fell 9.4% to just under $3.7 billion, reflecting a shift toward switch‑centric designs.

Pricing and Speed Trends

Sales of 200 Gb/s and 400 Gb/s Ethernet switches grew 44% YoY, with port shipments up 63.9%. Sales of 100 Gb/s switches in DC, campus, and edge grew modestly by 6%.

Vendor Share Analysis

Original design manufacturers (ODMs) account for 14.7% of DC Ethernet revenue ($705 million), up 7.4% YoY. Cisco derives 27.8% of its Ethernet revenue from DC (about $1.48 billion), while Arista holds a 10.6% DC share ($1.14 billion). Together, Cisco, Arista, and ODMs contributed $3.32 billion, representing 69.2% of the DC market.

Key Observations

Cisco has successfully protected and expanded its DC switching business, benefiting from campus upgrades, with DC growth of 12.9% versus 7.2% for Ethernet overall. Arista’s DC growth is roughly three times the market average (~20%). ODMs are keeping pace with market growth.

The server market outside AI clusters is in decline, yet Ethernet continues to upgrade at a moderate pace, underscoring the increasing importance of networking in data centers despite lingering supply‑chain constraints.

Additional Resources

The article also provides extensive reference lists on GPU and DPU technologies, linking to recent analyses, whitepapers, and market reports for readers interested in deeper exploration of those domains.