Data Center Switch Market

Data Center Switch Market Outlook (2024 to 2034)

Expanding at a CAGR of 5.2%, the global data center switch market is projected to increase from a valuation of US$ 16.1 billion in 2024 to US$ 26.76 billion by 2034.

A multiport network bridge called a data center switch is used to provide a network connection in a data center that facilitates the receipt, processing, and routing of data between destinations. Datacenter switches are mostly used by big businesses and cloud service providers. Today's data centers need switching solutions that are highly scalable, dependable, and high-performing due to the growing workload.

The demand for data center switches is increasing at a healthy pace with a growing focus on energy efficiency. There is pressure on data centers to minimize their energy usage and carbon footprint. The adoption of energy-efficient switches with sophisticated power management capabilities is been fueled by these worries, further enhancing the market's promising growth prospects for data center switches.

Citing an example, Switch's owner, DigitalBridge, disclosed a sizable investment in Aware Super in July 2023. Aware Super is diversifying its investments in digital infrastructure thanks to this funding. With its elite data centers and dedication to maintaining a carbon-neutral footprint, Switch's distinctive platform complements the goal of providing members with stable, risk-adjusted returns while managing the real assets of owners and operators ethically.

Because data centers need to link a huge number of servers across several layers, there is a significant need for switches. The need for automated and streamlined data center administration, the growing demand for cloud services, and the rise in online multimedia content and web applications are the main reasons propelling the market's expansion. The primary development prospects for the participants in the global market are the increasing trend of bare-metal switches and the expanding bandwidth needs in data centers.

One of the most crucial components of the data center's property is the data center switch, which is mostly located in the server rooms. Due to the disaggregation of the data center network architecture, these centers are becoming more aware of new types of switches, such as data center switches. They are mostly utilized by sizable businesses with the capacity to implement new technology.

The increasing need for simpler automation systems and data center administration by several end-users is leading to a boom in the market for three types of data center switches: the TOR switch, core, and others. The market is forecasted to increase because of the bare metal switch trend that is on the rise and the data centers' increasing need for bandwidth.

Report Attribute	Detail
Data Center Switch Market Size (2024E)	US$ 16.1 Billion
Forecasted Market Value (2034F)	US$ 26.76 Billion
Global Market Growth Rate (2024 to 2034)	5.2% CAGR
North America Market Value (2024E)	US$ 4.96 Billion
Mexico Market Value (2034F)	US$ 2.06 Billion
Core Switches Segment Growth Rate (2024 to 2034)	5.6% CAGR
United States Market Value (2034F)	US$ 5.5 Billion
Key Companies Profiled	Super Micro Computer, Inc.; Extreme Networks, Inc.; Cisco Systems, Inc.; Hewlett Packard Enterprise (HPE); Juniper Networks, Inc.; NVIDIA Corporation (Mellanox Technologies Ltd.); DELL EMC (DELL TECHNOLOGIES); Lenovo Group; Huawei Technologies Co., Ltd.; Arista Networks, Inc.

What is Influencing the Market Growth of Data Center Switches?

“Switches Provide Distribution Layer for Increasing Efficiency”

The wide network connectivity that these switches provide to distribution layers and several end users is the reason for the access switch market's greatest growth. In comparison to core and distribution switches, access switches are not very powerful, but they are needed in greater quantities over a multi-layered network. More ports are required by access switches to transfer data between networks and balance the load.

Thereby, these switches guarantee network and server connection. The market's technological advancements, such as increased bandwidth and performance as well as the growth of servers and data centers in several industries, are driving access switches demand, which is leading to increasing data center switch market size.

Ethernet switches provide excellent performance and scalability, which is contributing to the expanding market for Ethernet data center switches. The need for switches with more bandwidth is driven by the development of virtualization technologies and the proliferation of data centers.

An easy way to satisfy the growing need for data center connection is by using Ethernet, a conventional midrange technology. The high-bandwidth solution that InfiniBand switches provide for each port at a competitive price is the reason for the switches' surging demand.

“Energy Efficiency a Top Priority Among IT Businesses”

The market for data center switches is expanding at a healthy pace with increased attention to energy efficiency. There is pressure on data centers to minimize their energy usage and carbon footprint. The adoption of energy-efficient switches with sophisticated power management capabilities is been fueled by these worries, further enhancing the market's promising growth prospects for data center switches.

Citing an example, Switch's owner, DigitalBridge, disclosed a sizable investment in Aware Super in July 2023. Aware Super is able to diversify its investments in digital infrastructure thanks to this funding. Switch's distinctive infrastructure, which includes first-rate data centers and a dedication to having a completely carbon-neutral footprint, fits nicely with the company’s goal of providing its members with strong, risk-adjusted returns. They help in managing the real assets of owners and operators ethically, contributing to the overall expansion of the data center market growth.

“World Transforming Into More Digital Space”

The market is expanding at a faster rate than it would otherwise because of the increasing digital transformation of organizations brought about by the widespread use of artificial intelligence (AI) and machine learning (ML) technologies, the proliferation of Internet of Things (IoT) devices, and the expansion of big data analytics. Thus, data center switches are extensively used to guarantee high-speed data processing and transmission within data centers, which is crucial to handle the increasing volume of data and to manage the enormous quantity of data efficiently.

The market is growing because of the enormous amount of unstructured data coming from social media and mobile devices, which enables sophisticated data center switches to handle different kinds of data traffic. The introduction of fifth-generation (5G) communication technology is favorably influencing market expansion by increasing the amount and velocity of data passing through data centers.

Which Pointers Are Restricting Growth of the Market?

“Virtualization Leading to Removal of Hardware Equipment”

Organizations are beginning to adopt virtualization in their data centers. Virtualization facilitates the removal of hardware problems from data centers and makes it simple to relocate virtual computers. Provisioning of resources and capacity planning, data consolidation for space savings, faster server deployment times, enhanced manageability, and optimal resource usage are all made possible by virtualization.

Interconnect technologies are virtualizing in tandem with the growing trend of virtualization. Virtual switches that operate on the same servers are increasingly managing connections between several servers, which is reducing the need for switches in favor of improved servers that provide upstream core connectivity with optical cross-connects.

Country-wise Evaluation

With the world deepening into the digital age, more people are getting addicted to technology than ever. This is increasing the requirement for database and data centers, which is stimulating the market growth for data center switches in several countries including the United States, Canada, Japan, South Korea, and Mexico. The United States market is forecasted to hold a strong data center switches market share in North America.

Why is the United States Market Becoming a Focal Point in North America?

“Presence of Big IT Companies Escalating Demand for Data Center Switches”

Attribute	United States
Market Value (2024E)	US$ 3.08 Billion
Growth Rate (2024 to 2034)	6% CAGR
Projected Value (2034F)	US$ 5.5 Billion

The United States market is projected to be a prominent one in North America due to the presence of big IT companies that are driving the demand for data center switches. With major players in the technology industry expanding their data center infrastructure and investing in advanced networking equipment, the demand for data center switches is on the rise in the United States. This trend is analyzed to continue, making the United States market an attractive prospect for manufacturers.

Why Manufacturers are Looking Toward China in East Asia for Potential Growth?

“Aftermarkets and Economic Raw Materials for Data Center Switches Infrastructure”

Attribute	China
Market Value (2024E)	US$ 2.94 Billion
Growth Rate (2024 to 2034)	4.5% CAGR
Projected Value (2034F)	US$ 4.55 Billion

Manufacturers are looking toward China in East Asia for potential growth due to the availability of aftermarkets and cheap raw materials for data center switches infrastructure. China's robust manufacturing capabilities and access to cost-effective raw materials make it an appealing destination for companies looking to expand their production of data center switches. The growing demand for data center infrastructure in China further enhances the country's potential as a key market for manufacturers in this industry.

Category-wise Analysis

The infrastructure required during the installation of the data center comes with several challenges, thereby suppliers are introducing an array of switch types to tackle these challenges. Some of the major switches sold in the market include core switches, distribution switches, and access switches. All these switches are positively affecting the data center switches market trend.

Which Switch Types are Majorly Liked by IT Companies in the End Market?

“Access Switches Making More Sales Compared to Core Switches and Distribution Switches”

Attribute	Access Switches
Segment Value (2024E)	US$ 10.05 Billion
Growth Rate (2024 to 2034)	5.2% CAGR
Projected Value (2034F)	US$ 17.07 Billion

In the end market, access switches are experiencing higher sales compared to core switches and distribution switches. Access switches play a vital role in connecting several devices such as printers, computers, and IP phones to the network. With the increasing number of devices requiring network connectivity, the demand for access switches is surging. IT companies are prioritizing access switches to ensure seamless and reliable connectivity for end users, making them a major preference in the end market.

Which Data Center Switch Technology is More Prominent Globally?

“Ethernet Desired More Due to Its Efficiency and Speed”

Attribute	Ethernet
Segment Value (2024E)	US$ 9.14 Billion
Growth Rate (2024 to 2034)	4.4% CAGR
Projected Value (2034F)	US$ 15.95 Billion

Ethernet technology is more prominent globally in the context of data center switch technology. Its efficiency and speed make Ethernet the preferred choice for data center networking. With the ever-increasing demand for faster data processing and transfer within data centers, Ethernet technology is gaining prominence due to its ability to handle high volumes of data traffic effectively. Its widespread adoption and compatibility with several networking equipment further contribute to its global prominence in data center switch technology.

Business Competition

Key players in the data center switches market are focusing on bringing new transformations every year and launching new products including green data centers.

• Cisco and Aviz Networks partnered in October 2023 to provide a business-class SONIC solution for large clients wishing to use an open-source network operating system. Under this collaboration, Aviz Networks' SONIC management software will be integrated with Cisco's 8000 series routers and round-the-clock technical support will be provided. The service provided by this cooperation is focused on resolving customer problems regarding open-source NOS maintenance and guaranteeing a reliable solution.
• Hyperscalers chose Arista over Cisco for data center switches in September 2023. Over half of Arista's sales are generated by cloud service providers. The networking provider has also entered the enterprise sector to "diversify its business" more than ever before.

Fact.MR provides detailed information about the price points of key players in the data center switch market positioned across the world, sales growth, production capacity, and speculative technological expansion, in this new market report.

Segmentation of Data Center Switch Market Research

• By Switch Type :

  • Core Switches
  • Distribution Switches
  • Access Switches

• By Technology :

  • Ethernet
  • Infiniband

• By Region :

  • North America
  • Western Europe
  • Eastern Europe
  • Latin America
  • East Asia
  • South Asia & Pacific
  • Middle East & Africa