Sunday, March 10, 2024

IDC: Ethernet Switch Revenues up 20.1% in 2023

The worldwide Ethernet switch revenues grew 20.1% year over year in 2023 to $44.2 billion, according to the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and the Worldwide Quarterly Router Tracker. In the fourth quarter of 2023 (4Q23) the Ethernet switch market grew 0.8%. The total worldwide enterprise and service provider (SP) router market recorded $16.4 billion in revenue in 2023, a year-over-year decline of 0.4%. The router market also saw a year-over-year decline of 12.7% in 4Q23. 

"The worldwide Ethernet switch market was dynamic in 2023, driven by a variety of trends, in particular by the impact of AI," said Vijay Bhagavath, research vice president, Cloud and Datacenter Networks. "In the datacenter portion of the market, enterprises and service providers are building ever-faster Ethernet switch speeds to support rapidly maturing AI workloads. In the non-datacenter portion, Ethernet switch vendors are embedding AI capabilities in software management platforms to improve operations. Connectivity in general, and Ethernet switching in particular, are playing an increasingly critical role in supporting the era of AI everywhere."

Ethernet Swith highlights

  • Datacenter Ethernet switch market revenues increased by 13.6% year over year in 2023 and by 4.4% in Q4 2023, representing 41.5% of the total market revenues.
  • Revenues for 200/400 GbE switches in the datacenter segment surged by 68.9% throughout 2023 and by 14.8% from Q3 to Q4 2023.
  • 100GbE switches, constituting 46.3% of the datacenter market's revenues, grew by 6.4% in 2023 but saw a sequential decline of 3.0% from Q3 to Q4 2023.
  • ODM Direct sales in the datacenter segment increased by 16.2% year over year in 2023, accounting for 14.3% of the segment's annual revenues.
  • The non-datacenter Ethernet switch market grew by 25.2% year over year in 2023, despite a 1.9% decrease in Q4 2023.
  • The non-DC segment experienced growth due to improved component availability and the fulfillment of backlogged orders, although new product orders slowed in Q4 2023.
  • Within the non-DC segment, 1GbE switches rose 24.2% in 2023 but fell by 7.0% in Q4, whereas 10GbE switches increased by 5.3% annually but dropped 6.1% in Q4 2023.
  • Geographically, the U.S. Ethernet switch market grew 28.8% in 2023 and 3.8% in Q4 2023. Western Europe saw a 19.3% annual increase but a 6.9% decline in Q4. Central & Eastern Europe grew 20.7% annually but declined 1.6% in Q4. The market in the People's Republic of China decreased by 4.0% in 2023 but improved by 9.1% in Q4. The Asia/Pacific region (excluding Japan and China) grew 15.0% annually but declined 9.0% in Q4 2023.

Router Market Highlights

  • The service provider segment, encompassing communications and cloud service providers, constituted 76.6% of the total router market, with a 1.4% revenue increase in 2023 but a 10.6% decrease in Q4 2023.
  • The enterprise segment made up the remainder of the router market, experiencing a 6.1% decline in revenue for 2023 and an 18.6% decrease in Q4 2023.
  • In the Americas, the combined service provider and enterprise router market saw a 2.0% increase in revenue for 2023 but an 18.0% decrease in Q4 2023.
  • The Asia/Pacific region's router market experienced a 2.1% decline in revenue for 2023 and a 6.5% decrease in Q4 2023.
  • In the Europe, Middle East & Africa (EMEA) region, the market saw a 1.7% decline in revenue for 2023 and a 13.6% decrease in Q4 2023.

Vendor Highlights

Cisco's Ethernet switch revenues increased 22.2% year over year in 2023 but declined 12.1% in 4Q23. Non-DC revenues made up 69.5% of Cisco's total Ethernet switch revenues in 2023 and rose 28.6% year over year for the full year but declined 12.8% in 4Q23. DC revenues made up the balance and rose 9.7% for the year but declined 10.6% in 4Q23. Cisco's total Ethernet switch share stood at 43.7% for the full year 2023. Cisco's combined service provider and enterprise router revenue rose 1.4% for the full year 2023, but declined 22.9% in 4Q23, giving the company a market share of 35.7% for 2023.

Arista Networks Ethernet switch revenues – 91.4% of which are in the DC segment – increased 35.2% in 2023 and rose 19.1% in 4Q23, giving the company 11.1% market share for full year 2023.

Huawei's total Ethernet switch revenue increased 10.6% in 2023 and 16.5% in 4Q23, giving the company market share of 9.4% for the full year 2023. The company's combined SP and enterprise router revenue rose 2.6% in 2023 and was up 0.9% in 4Q23, giving the company 29.2% market share for 2023.

HPE's Ethernet switch revenue – 89.6% of which are in the non-DC segment – increased 67.6% in 2023 and rose 50.8% in 4Q23, resulting in a market share of 9.4% for full year 2023.

H3C's Ethernet switch revenue declined 6.3% for the full year 2023, but rose 12.9% in 4Q23, giving the company full-year market share of 4.2%. In the combined service provider and enterprise routing market, H3C's revenues decreased 8.5% in 2023 and 9.8% in 4Q23, giving the company market share of 2.0% for 2023.


IDC: Enterprise WLAN sales dropped in Q4

The latest release of the International Data Corporation (IDC) Worldwide Quarterly Wireless LAN Tracker reports that the enterprise segment of the worldwide wireless local area network (WLAN) market saw revenues grow 7.6% year over year in 2023 to $10.8 billion, however, in the fourth quarter, enterprise customers deployed a record amount of product inventory, leading to a sharp decline of 25.5% compared to Q4 2022.

"2023 was a dynamic year in the enterprise WLAN market, driven by myriad factors including the effects of the supply chain disruptions, product backlogs, and the shipping of product inventory, combined with a fragile macroeconomic environment," said Brandon Butler, research manager, Enterprise Networks. "Nonetheless, WLAN remains a critically important technology for organizations across the globe as they build out a future connectedness strategy."

Some highlights from IDC:

Adoption of Wi-Fi 6E:

  •     * Continued growth in 4Q23, expanding Wi-Fi use to the 6 GHz spectrum.
  •     * In the enterprise sector, Wi-Fi 6E revenues grew 11.7% from Q3 to Q4 2023, representing 22.6% of dependent AP quarterly revenues and 10% of unit shipments.
  •     * Wi-Fi 6 accounted for the majority of dependent AP revenues (72.8%) and unit shipments (77.5%), with Wi-Fi 5 making up the remainder.

Consumer WLAN Market in 2023:

  • Declined 12.8% year over year for the full year.
  •  Declined 14.5% in 4Q23.
  •  Wi-Fi 6 constituted 64.1% of consumer market revenues; Wi-Fi 5 accounted for 26.5%.
  •  Wi-Fi 6E adoption was low in the consumer segment, at 6.7% of revenues in 4Q23.

Enterprise WLAN Market by Region:

  • United States: Increased 20.6% year over year for 2023 but declined 25.9% in 4Q23.
  • Canada: Rose 14.5% for the full year but fell 32.3% in the fourth quarter.
  • People's Republic of China: Declined 17.5% for the full year and 18.0% in 4Q23.
  • Asia/Pacific (Excluding Japan & China): Declined 16.9% in the quarter but rose 6.2% for the full year.
  • Europe, the Middle East & Africa (EMEA): Dropped 32.1% in the quarter but increased 1.6% for the full year.
  • Latin America: Dropped 15.1% in 4Q23 but increased 25.1% for the full year.

Company Highlights

  • Cisco's enterprise WLAN revenues declined 40.3% year over year in 4Q23, but rose 11.2% for the full year to $4.6 billion. The company's market share stood at 42.6% for the full year.
  • HPE Aruba Networking revenues declined 21.6% year over year in 4Q23 and rose 7.0% for the full year, giving the company market share of 14.6% for 2023.
  • Huawei enterprise WLAN revenues declined 0.4% in 4Q23, but rose 13.8% for the full year, giving the company market share of 8.0% for calendar year 2023.
  • Ubiquiti enterprise WLAN revenues declined 11.3% in 4Q23 and declined 2.6% for the full year, giving the company market share of 6.1% in 2023.
  • CommScope enterprise WLAN revenues declined 33.1% in 4Q23, but rose 23.3% for the full year, giving the company market share of 4.4% in 2023.
  • Juniper Networks enterprise WLAN revenues increased 13.2% year over year in 4Q23 and rose 26.6% for the full year, giving the company market was of 4.1% for the full year.


Crehan: Server-class Ethernet NIC revenue tops $6B in 2023

During calendar-year 2023, data center customers invested significantly in server and storage networking, which drove total annual server-class Ethernet NIC market revenues to $6 billion, according to a recent report from Crehan Research. 

Spending on accelerated networking was particularly strong, resulting in SmartNIC revenue – including DPUs and IPUs – surpassing foundational/performance NIC revenue during the year and now comprising more than half of the total revenue.

“Although foundational/performance NICs still account for most of the server-class Ethernet NIC shipments, broader adoption of SmartNICs coupled with their higher average selling price pushed these products to account for a majority of the total server-class Ethernet NIC market revenue,” said Seamus Crehan, president of Crehan Research.

Crehan also reported that the SmartNIC revenue increase was much stronger for merchant-built SmartNICs, as opposed to the self-built proprietary SmartNICs that were the early driver of growth in this market. “Even before generative AI arrived, data center networking customers – especially the larger cloud service providers – were significantly deploying SmartNICs to offload, secure and accelerate the increased volume and complexity of their server and storage networking traffic," Crehan said.


Marvell reports Q4 sales of $1.427B, demand for AI data centers

Marvell Technology reported net revenue of $1.427 billion for its fourth fiscal quarter ended February 3, 2024, above the mid-point of the company's guidance provided on November 30, 2023. GAAP net loss for the fourth quarter of fiscal 2024 was $(392.7) million, or $(0.45) per diluted share. Non-GAAP net income for the fourth quarter of fiscal 2024 was $401.6 million, or $0.46 per diluted share. Cash flows from operations for the fourth quarter was $546.6 million.

Net revenue for fiscal 2024 was $5.508 billion. GAAP net loss for fiscal 2024 was $(933.4) million, or $(1.08) per diluted share. Non-GAAP net income for fiscal 2024 was $1.310 billion, or $1.51 per diluted share.

Revenue by category

  • Data center $765.3 million
  • Enterprise Networking $265.0 million
  • Carrier Infrastructure $170.0 million
  • Consumer $143.9 million
  • Automotive/industrial $82.3 million

"Marvell delivered fourth quarter fiscal 2024 revenue of $1.427 billion, above the mid-point of guidance. AI drove strong growth in our data center end market revenue which increased 38% sequentially and 54% year-over-year. As a critical enabler of accelerated infrastructure for AI, Marvell is well positioned to capitalize on this massive technology inflection, which continues to gain momentum," said Matt Murphy, Marvell's Chairman and CEO. 

"In the first quarter of fiscal 2025, we expect continued sequential growth in our data center revenue with initial shipments of our cloud optimized silicon programs for AI complementing our electro-optics franchise. While we are forecasting soft demand impacting consumer, carrier infrastructure, and enterprise networking in the near term, we expect revenue declines in these end markets to be behind us after the first quarter, and project a recovery in the second half of the fiscal year."


Broadcom reports revenue of $11.9B, demand for data center networks

 Broadcom reported revenue of $11,961 million for its first quarter, ended February 4, 2024, up 34 percent from the prior year period and up 11% from the prior year period when excluding the contribution of VMware.  GAAP net income was $1,325 million for the first quarter and GAAP diluted EPS was $2.84. Non-GAAP net income was $5,254 million for the first quarter and Non-GAAP diluted EPS was $10.99.

"We are pleased to have two strong drivers of revenue growth for Broadcom in the first quarter and fiscal year 2024. First, our acquisition of VMware is accelerating revenue growth in our infrastructure software segment, as customers deploy VMware Cloud Foundation. Second, strong demand for our networking products in AI data centers, as well as custom AI accelerators from hyperscalers, are driving growth in our semiconductor segment," said Hock Tan, President and CEO of Broadcom Inc. "We reiterate our fiscal year 2024 guidance for consolidated revenue of $50 billion and adjusted EBITDA of $30 billion."

"Consolidated revenue grew 34% year-over-year to $12.0 billion, including the contribution from VMware, and was up 11% year-over-year, excluding VMware. Adjusted EBITDA increased 26% year-over-year to $7.2 billion," said Kirsten Spears, CFO of Broadcom Inc. "Free cash flow, excluding restructuring in the quarter, continued to be strong at $5.4 billion. We have started to pay down debt, beginning with $3 billion to date in 2024, and expect to continue to pay down debt in fiscal year 2024."


Astera Labs launches IPO - PCIe + CXL + Ethernet

Astera Labs launched an initial public offering of 17,800,000 shares of its common stock. The offering consists of 14,788,903 shares of common stock offered by Astera Labs and 3,011,097 shares of common stock to be sold by certain of Astera Labs’ existing stockholders. Astera Labs will not receive any proceeds from the sale of shares by the selling stockholders.

In addition, the underwriters will have a 30-day option to purchase up to an additional 2,670,000 shares of common stock from Astera Labs at the initial public offering price, less underwriting discounts and commissions. The initial public offering price is expected to be between $27.00 and $30.00 per share. The shares are expected to begin trading on the Nasdaq Global Select Market under the ticker symbol “ALAB.”

Astera Labs raises $150M for its CXL platform

Astera Labs, a start-up based in Santa Clara, California, raised $150 million in Series-D funding with a $3.15B valuation for its data and memory connectivity solutions based on Compute Express Link (CXL), PCIe, and Ethernet technologies. 

Fidelity led the funding round and was joined by other existing investors, including Atreides Management, Intel Capital, and Sutter Hill Ventures.

“Astera Labs continues to surpass every milestone for a technology start-up, and we are now deep into the next stage of evolution for our company as we accelerate growth,” said Jitendra Mohan, CEO, Astera Labs. “This latest funding round is a testament that we are not only invested in the right growth markets such as Cloud, Artificial Intelligence/Machine Learning, and Hyperscale infrastructure, but that we are also able to consistently execute and deliver breakthrough connectivity products that are critical to our customers and partners.”

In its Series-D funding round led by Fidelity Management and Research, Astera Labs