Industry News
AI Scale-up Switch Chip Market Experiences Explosive Growth
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Author : JIUZHOU
Update time : 2026-06-26 10:50:49
As hyperscale data centers worldwide spend more on AI infrastructure, suppliers are shipping record amounts. The core supply chain upstream is at peak shipment levels.
The latest trusted industry research report says global data center switch chip sales may grow 86% in 2026.
It also forecasts a 36% compound annual growth rate over the next five years. Among these, scale-out switch chips used for hyperscale parallel computing have emerged as the fastest-growing segment.
I. AI Infrastructure Reshapes Network Architecture: Dual-Drive Approach of Scale-up and Scale-out
Driven by high computing needs for training and running large AI models, traditional data center networks are changing fast. Current mainstream AI networks are primarily divided into two camps:
Scale-out networks: Built on traditional Ethernet and high-performance network protocols, these networks connect large server clusters. Ethernet switch chips are projected to maintain a robust compound annual growth rate (CAGR) of 32% over the next few years.
Scale-up Networks: Focus on fast, ultra-low-latency links between GPUs and accelerator chips within one cluster. Benefiting from the dense deployment of next-generation microarchitecture accelerator servers. The CAGR for scale-up switch chip ASICs is expected to reach as high as 53%. Becoming the core growth engine for the entire network chip market.
Data from a global networking chip giant confirms this trend. Its backlog of orders for AI switching chips has reached $10 billion. At the same time, networking revenue at major chip makers has grown several-fold year over year.
II. The Scale-up Market Landscape: The Balance Between Technological Iteration and Open Standards
1. The Convergence of Proprietary Protocols and Co-Packaged Optics
Currently, in the vertical scaling network sector, a proprietary interconnect protocol from a leading vendor holds most market share. According to the technology roadmap, after undergoing multiple iterations, this technology has begun to evolve toward CPO.
Industry Insights:
Co-packaging optical modules with switch chips cuts power use and signal loss at ultra-high bandwidths. It also adds high-value optical parts. This should boost projected switch chip sales in 2029 and beyond.
2. Open Alternatives to Emerge in 2026
Although proprietary protocols dominate the market today, alternatives will soon appear. These include the Open Accelerator Interconnect Alliance standard and Enhanced Ethernet. They are designed for vertical scaling and will emerge quickly starting in 2026. This shift is driven by cloud providers’ urgent need to diversify and decentralize supply chains.
III. The Breakthrough and Generalization of Optical Circuit Switching Technology
Alongside electronic packet-switching chips, optical circuit switches are becoming a key part of all-optical networks.
Currently, market analyses provide detailed forecasts for OCS based on port density. As more cloud giants adopt all-optical micro-mechanical technology. It is no longer just a custom tool for one industry leader. It is becoming a next-generation, low-latency network solution for the entire industry.
IV. Industry Summary and Outlook
The skyrocketing demand for AI computing power is having a disproportionate impact on the entire telecommunications industry chain. Forecasts for Ethernet switching chips have been updated. They now include ASIC sales with switching capacity up to 204T. They also include SerDes channel shipments from 50G to 400G.
In this tech race, chip suppliers with next-gen high-speed channel tech, advanced CPO packaging skills, and open network standards will lead. Over the next 5 to 10 years, they will gain a clear edge during the AI boom.
The latest trusted industry research report says global data center switch chip sales may grow 86% in 2026.
It also forecasts a 36% compound annual growth rate over the next five years. Among these, scale-out switch chips used for hyperscale parallel computing have emerged as the fastest-growing segment.
I. AI Infrastructure Reshapes Network Architecture: Dual-Drive Approach of Scale-up and Scale-out
Driven by high computing needs for training and running large AI models, traditional data center networks are changing fast. Current mainstream AI networks are primarily divided into two camps:
Scale-out networks: Built on traditional Ethernet and high-performance network protocols, these networks connect large server clusters. Ethernet switch chips are projected to maintain a robust compound annual growth rate (CAGR) of 32% over the next few years.
Scale-up Networks: Focus on fast, ultra-low-latency links between GPUs and accelerator chips within one cluster. Benefiting from the dense deployment of next-generation microarchitecture accelerator servers. The CAGR for scale-up switch chip ASICs is expected to reach as high as 53%. Becoming the core growth engine for the entire network chip market.
Data from a global networking chip giant confirms this trend. Its backlog of orders for AI switching chips has reached $10 billion. At the same time, networking revenue at major chip makers has grown several-fold year over year.
II. The Scale-up Market Landscape: The Balance Between Technological Iteration and Open Standards
1. The Convergence of Proprietary Protocols and Co-Packaged Optics
Currently, in the vertical scaling network sector, a proprietary interconnect protocol from a leading vendor holds most market share. According to the technology roadmap, after undergoing multiple iterations, this technology has begun to evolve toward CPO.
Industry Insights:
Co-packaging optical modules with switch chips cuts power use and signal loss at ultra-high bandwidths. It also adds high-value optical parts. This should boost projected switch chip sales in 2029 and beyond.
2. Open Alternatives to Emerge in 2026
Although proprietary protocols dominate the market today, alternatives will soon appear. These include the Open Accelerator Interconnect Alliance standard and Enhanced Ethernet. They are designed for vertical scaling and will emerge quickly starting in 2026. This shift is driven by cloud providers’ urgent need to diversify and decentralize supply chains.
III. The Breakthrough and Generalization of Optical Circuit Switching Technology
Alongside electronic packet-switching chips, optical circuit switches are becoming a key part of all-optical networks.
Currently, market analyses provide detailed forecasts for OCS based on port density. As more cloud giants adopt all-optical micro-mechanical technology. It is no longer just a custom tool for one industry leader. It is becoming a next-generation, low-latency network solution for the entire industry.
IV. Industry Summary and Outlook
The skyrocketing demand for AI computing power is having a disproportionate impact on the entire telecommunications industry chain. Forecasts for Ethernet switching chips have been updated. They now include ASIC sales with switching capacity up to 204T. They also include SerDes channel shipments from 50G to 400G.
In this tech race, chip suppliers with next-gen high-speed channel tech, advanced CPO packaging skills, and open network standards will lead. Over the next 5 to 10 years, they will gain a clear edge during the AI boom.
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