According to the AI Networks for AI Workloads report by Dell’Oro Group, spending on data center switches for AI back-end networks is expected to exceed $100 billion over the next five years, spanning from 2025 to 2029.
The report highlights that Celestica, Huawei, and NVIDIA led the market in 2024, but significant shifts are anticipated in 2025. Sameh Boujelbene, Vice President at Dell’Oro Group, stated that despite concerns regarding infrastructure spending in light of DeepSeek’s recent open-source announcements, demand for high-end accelerators and supporting infrastructure remains strong.
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The recently updated forecast for data center switch sales in AI back-end networks has been raised compared to earlier forecasts, with an increased emphasis on Ethernet technology while expectations for InfiniBand have been reduced. Boujelbene noted that Ethernet is gaining traction as the primary fabric for large-scale AI clusters, driven by supply and demand dynamics. Notably, even major NVIDIA GPU-based clusters, such as xAI’s Colossus, are adopting Ethernet, prompting an advancement in the projected crossover timeline of Ethernet with InfiniBand by one year.
In 2024, Celestica, Huawei, and NVIDIA were prominent in the Ethernet segment, but the competition is expected to intensify in 2025 as other vendors like Accton, Arista, Cisco, Juniper, and Nokia increase their market presence.
Expectations for future switch ports
The report also projects that the majority of switch ports deployed in AI back-end networks will reach 800 Gbps by 2025, with expectations of 1600 Gbps by 2027, and 3200 Gbps by 2030. While Tier 1 Cloud Service Providers are forecasted to drive most of the demand, substantial growth is also anticipated from Tier 2/3 providers and large enterprises due to their rapid adoption of AI workloads.
Dell’Oro Group’s report delves into the optimization of InfiniBand versus Ethernet in AI back-end networks and outlines choices made by leading Cloud Service Providers, providing a comprehensive five-year market forecast categorized by customer type and port speed.
Featured image credit: Dell’Oro
