Press Release

Cisco goes toe-to-toe with data center switch silicon rivals

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Proprietary/custom data-plane forwarding silicon used in data center (DC) switches now is facing intense competition from merchant silicon vendors like Broadcom, Intel (via Barefoot Networks) and Marvell.

Global shipments of DC Ethernet switch data-plane forwarding chips are set to expand to 1.5 million units in 2023, rising at a compound annual growth rate (CAGR) of 1.6 percent from 1.4 million in 2018, according to the Data Center Network Equipment Market Tracker—Q3 2019 report from IHS Markit | Technology, now a part of Informa Tech.

Growth is being constrained by a decline in the proprietary/custom silicon segment of the market, which is expected to contract at a 9 percent CAGR from 2018 through 2023. In contrast, the merchant silicon segment of the market will rise at a 4 percent CAGR during the forecast period, while shipments in the more niche programmable chip segment will expand by a robust 25 percent.

The merchant chip segment of the DC switch data-plane forwarding silicon market was boosted in the third quarter of 2019 by a major merchant silicon product introduction from Cisco, a major proprietary silicon developer whose latest release enters it into the merchant silicon game.

“Historically, DC switch vendors have deployed switches integrated with their own custom silicon,  but they now are expanding their portfolios to include ASICs from third-party vendors”, said Devan Adams, principal analyst at IHS Markit | Technology. “As a result, this noticeable market trend likely fueled Cisco to make its latest announcement”

In December 2019, Cisco made a startling entrance into the merchant programmable silicon market by introducing its Q100 chip as part of its new Silicon One strategy. The Q100 will be used in Cisco’s own data-center networking equipment and also will be sold to other switch vendors. The Q100 chip is designed for data center switching and routing equipment.

Cisco says it worked with Google Cloud to develop the new silicon, which is being trialed in its new 8000 Series routers by several cloud and telco providers. The Q100 P4-programmable chip supports up to 27x400GE ports and 10.8T throughput. The chip also features deep buffering and high-bandwidth memory (HBM).

In another significant development, Broadcom released the Tomahawk 4 ASIC, which is currently shipping to select customers. Tomahawk 4 chips include four 1 Gbps ARM processors, which are built using a 7nm production process. These chips can handle up to 64x400GE ports and 25.6T throughput per chip. They also support in-band network telemetry (INT).

Merchant silicon to dominate the data center switch market

IHS Markit | Technology forecasts merchant silicon shipped in data-center Ethernet switches will reach 62 percent of all silicon units in 2023 (up from 56 percent in 2018), while proprietary/custom silicon will top 22 percent (down from 38 percent in 2018), and programmable silicon will account for 16 percent, noticeably up from 6 percent in 2018.

DC Ethernet switch silicon shipments by silicon type

 

As higher-speed ports like 200/400GE are introduced, the number of silicon units shipped may decline during some time periods. However, these temporary fluctuations will soon be negated as average selling prices decline, making higher-speed units more affordable and available.

Proprietary silicon mostly resides in equipment sold by well-established data-center switch vendors like Cisco and Juniper, which have the R&D resources to develop their own chips in-house. The programmable silicon market is served by a mix of merchant and proprietary chip vendors like Huawei and Intel.

Merchant DC switch silicon supply is well-positioned for sustained growth

Merchant data-center switch silicon growth can be attributed to several factors, including reductions in data-center capital spending and rising software defined networking (SDN) deployments. Programmable silicon is being offered by both established vendors and startup companies, and currently plays a niche role in the market.

“The latest releases by Cisco and Broadcom prove that merchant silicon is having a huge impact on the market,” Adams said. “This impact is only growing as silicon manufacturers cater their products to win business from hyperscale, tier-2 cloud and telco providers that have substantial buying power and that are continuously expanding their data-center infrastructure footprint.”

Data Center Network Equipment Intelligence Service

The Data Center Network Equipment Market Tracker is a part of IHS Markit | Technology’s comprehensive Data Center Networks Intelligence Service. This service provides quarterly worldwide and regional market size, vendor market share, and forecasts through 2023.

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