Nvidia is planning to move into the data center Ethernet networking market. CFO Colette Kress said the company is “progressing well” with its Spectrum-X Ethernet-based networking solutions. The company already has a multi-billion dollar business in Ethernet NIC products, but Spectrum-X includes a lot more.
Cisco, Arista and DriveNets may want to brace themselves: Artificial intelligence GPU giant Nvidia appears to be planning a major move into the data center Ethernet networking market.
In fact, during Nvidia’s recent earnings call, CFO Colette Kress said that its Spectrum-X Ethernet-based networking solution, launched in May 2023, is “on track to launch a multi-billion-dollar product line within a year.” The company also just joined the Ultra Ethernet Consortium.
Alan Weckel, co-founder and analyst at 650 Group, told Fierce that Nvidia is familiar with the Ethernet market: the company already has a multibillion-dollar business in the space in the form of its Ethernet NIC products.
But the complete Spectrum-X platform includes much more, including switches, optics, cables and network interface cards (NICs).
Spectrum-X puts Nvidia in competition with Arista, Cisco, DriveNets and Juniper at the system level, and Broadcom, Marvell and Cisco on the ASIC side. And now, Nvidia is expanding platform adoption with tier 2 cloud providers and bundled solutions. In fact, Kress said on the conference call, “Hundreds of customers have already adopted the platform.”
“In many cases it will be a replacement for InfiniBand switches,” Weckel said of Spectrum-X in an email. “At the market level, Nvidia will cannibalize some of the InfiniBand market for itself (but not zero) and gain share in datacenter switching (both back-end and front-end).”
Infiniband conversion
Nvidia had previously pushed its own version of Infiniband for networking, but appeared to reverse course after hyperscalers (backed by Arista, Cisco, DriveNets and others) made clear their preference for Ethernet. In November 2023, Nvidia announced partnerships with Dell Technologies, Hewlett Packard Enterprise and Lenovo to build Spectrum-X capabilities into their servers.
During the conference call, Kress said Nvidia plans to “launch new Spectrum-X products every year to meet the demand to scale computing clusters from tens of thousands of GPUs today to millions of DPUs in the near future.”
Sameh Boujelbene, vice president at Dell’Oro Group, told Fierce, “Nvidia is positioning Spectrum-X as an alternative fabric to InfiniBand for AI backend network deployments, where InfiniBand currently dominates with over 80% market share, but Ethernet switches optimized for AI deployments are rapidly gaining popularity.”
Bugelbene added that Nvidia’s success with Spectrum-X so far has been driven primarily by “one large cluster of 100,000 GPUs and a few smaller deployments with cloud service providers.”
But Ethernet is expected to dominate in the long term: Bugelbene said Dell’Oro expects Ethernet switches to overtake InfiniBand for AI in the back-end networking market by 2028, with revenues exceeding $10 billion.
