According to the latest report of Dell'Oro Group, a market research company, the Ethernet switch data center market is expected to grow at a compound annual growth rate of nearly double-digit percentage between 2022-2027, and the accumulated expenditure in the next five years will exceed 100 billion dollars. Dell'Oro Group said that its market outlook did not include potential additional sales related to CPO, because customer interest and technical readiness were still changing.

"Although we expect the revenue growth in 2023 to slow down in the short term, we predict that the sales of data center switches will increase at a high single-digit percentage or even double-digit percentage every year in the forecast period." said Sameh Boujelbene, vice president of Dell'Oro Group. "Most of the growth will be driven by cloud service providers. It is expected that cloud service providers will account for 60% of the sales of data center switches by 2027, and promote the massive adoption of 400 Gbps, 800 Gbps and 1600 Gbps."

"We expect that by 2027, 400 Gbps and higher speed switches will account for nearly 70% of the data center switch sales. The surge in AI workload will further accelerate this adoption. However, with the improvement of network speed, pluggable optical devices may reach the physical limit and no longer meet the requirements of heat and density. Therefore, the industry has begun to develop alternative solutions, such as CPO. However, the adoption of CPO will depend on Several factors: 1) Whether CPO can bring significant cost and power savings compared with pluggable optical devices; 2) Customer's product roadmap and interests. Our current forecast of CPO shows that there will be no massive adoption in the forecast period. " He added.

Other key contents of the five-year forecast report of Ethernet switch-data center in January 2023 include:

·It is expected that 800 Gbps will exceed 400 Gbps by 2025. The availability of 800 Gbps optical devices and 25.6 T chips drives the adoption of 800 Gbps switch ports. This adoption is led by Google, but other cloud service providers are expected to follow suit.

·The adoption of SONIC is expected to accelerate in the forecast period and achieve 10% - 20% penetration in Tier 2/3 cloud service providers and large enterprises by 2027.