Continued expansion likely of nearly $3 billion Ethernet silicon market

MOUNTAIN VIEW, USA: The Linley Group has released its latest report, A Guide to Ethernet Switch and PHY Chips, which predicts the market for Ethernet silicon will exceed $2.8 billion this year, and expand to $3.4 billion by 2014.

The analyst firm expects the 10 Gigabit Ethernet (GbE) market to experience a more than 42 percent compound annual growth rate through 2014, with the rapid deployment of 10GbE servers and aggregation switches in the data center. While Gigabit Ethernet switch port shipments are expected to double through 2014, declining ASPs will drive a moderate rise in revenue from $1.1 billion in 2010 to $1.35 billion in 2014.

"We believe the Gigabit Ethernet market has matured and the 10GbE market has begun to ramp aggressively, driven primarily by the need to expand and aggregate resources in the data center," said Jag Bolaria, Linley Group analyst and coauthor of the report.

"Technology transitions tend to create increased competition among vendors and large shifts in vendor share, and the 10GbE market is no different. Successful vendors will be those that not only increase ports counts, but also manage power dissipation and deliver integrated solutions supporting converged switching."

This report from the Linley Group analyzes technology trends and vendor offerings in five key segments: GE switch chips, 10GbE switch chips, Carrier-Ethernet switches, 10GbE PHYs for copper and optical media and 10GbE (KR) backplane transceivers. The report provides head-to-head product comparisons, and offers opinions on which product solutions have the most potential to succeed.

Data center and WAN markets drive Ethernet IC development
Power and energy-efficient design remain key concerns for server designers and data center owners, making chip power dissipation a top priority. In addition, the convergence of communication and storage networks has given rise to switch systems that support Ethernet, Fibre Channel and Fibre Channel over Ethernet (FCoE). This represents a tremendous opportunity for the first silicon vendor to develop chips that integrate all of these switch technologies.

Ethernet is also expected to see growing adoption in the access and metro markets, as service providers migrate from circuit switched technologies to Carrier Ethernet, a packet switched technology.

Carrier Ethernet technologies can be applied to mobile backhaul, to broadband access, aggregation, and transport systems, however, these systems have varying market requirements. Both established and new players have solutions to address different segments of this expanding market.