Ethernet Adapter Market to See Record Revenue Growth in 2022

According to a recent report released by DellOro Group, although the Ethernet adapter market grew 40% in 2022, the market is expected to slow down in 2023.

This was due to server vendors reducing inventory levels in anticipation of lower enterprise demand, and major cloud service providers going through a capital expenditure digestion cycle, the report found.

Growing bandwidth demands, data center consolidation and virtualization are driving the need for 10, 25, 40, 50, 100 and 200 Gbps Ethernet controllers and adapters.

“The Ethernet adapter market sees record revenue growth in 2022, driven primarily by a shift in product mix toward higher-speed ports and higher price points,” said Baron Fung, research director at DellOro Group.

“However, the market is changing rapidly as suppliers reduce inventory levels as the market moves from a supply-constrained environment to an oversupplied environment,” he said.

"Enterprise demand is expected to slow this year, and we expect some major cloud service providers to go through a server digestion cycle," Fung said.

“However, as server access speeds continue to increase, there is still opportunity in the market, and SmartNIC adoption is expected to expand in 2023.”

According to the Ethernet Adapter and SmartNIC Report, Q4 2022, the Ethernet adapter market is expected to grow revenue by 13% in 2023.

The report also found that 100 Gbps and higher speed ports could account for nearly half of the market in 2023, with smart NIC open vendors such as AMD, Intel and NVIDIA able to seize opportunities in the cloud and enterprise markets this year.

To capitalize on opportunities in this market, component manufacturers, equipment suppliers, service providers and financial institutions need to answer key business questions, Fung said, including:

• How quickly will data centers migrate server connections to 10, 25, 40, 50, 100, and 200 Gbps Ethernet?
• What is the difference between high-speed server migration in enterprise data centers and cloud data centers?
• How does server high-speed migration differ between stand-alone (rack and tower), blade, and high-density servers?
• What is the adoption rate of various fiber and copper technologies (such as 10G Base-T)?
• Which system and component suppliers are gaining market share?
• Where are SmartNICs being adopted today and which vendors will participate in this market?

The DellOro Group Ethernet Adapter and SmartNIC Quarterly Report provides complete market coverage covering manufacturer revenues; average selling price; and unit and port shipments of Ethernet controllers and adapters by speed (1 Gbps, 10 Gbps, 25 Gbps, 40 Gbps, 50 Gbps, 100 Gbps and 200 Gbps). The report also covers SmartNIC controllers and adapters.