Cloud service provider spending on ethernet data center switches declined for first time in three years – Dell'Oro

Revenue growth exhibited a mixed pattern across regions. North America and APAC outside of China experienced a downturn, largely attributed to challenging year-over-year comparisons, indicating the onset of a digestion cycle in these regions. Conversely, EMEA maintained growth, albeit with a notable deceleration compared to the preceding three quarters. China saw a surge in revenue following four consecutive quarters of sluggish growth.

Shipments of 200 Gbps, 400 Gbps, and 800 Gbps switches constituted just over 20 percent of total port shipments in 2023. We expect 400 Gbps and 800 Gbps adoption to accelerate in 2024 and 2025, as some of the AI workloads will start favoring Ethernet. We discuss the potential future adoption of Ethernet in AI infrastructure in our recently published "AI Network for AI workload" report.