AI/ML Workloads and Next-Generation Server Designs to Drive Growth
New network architectures and increased server speeds are causing the connectivity market inside the data center to move away from Direct Attach Copper (DAC) to active solutions. The current DAC technology can’t scale with the speed coming from next-generation server designs in the Cloud. Similar to other technologies, the Cloud will lead the way, but the broader markets of enterprise and service providers will enjoy the benefits of the technology.
Server speed is quickly moving to 112 Gbps SERDES and 100 Gbps ports for server access. There are several reasons behind this, such as the rapid move to PCIe Gen 4 and 5, faster processors, and the introduction of AI/ML workloads. But the more significant reason is the increase in accelerators via Smart NICs and DPUs.
2022-2024 server architectures take advantage of these factors and can drive multiple 100 Gbps lanes per server. DAC can’t scale as the distance becomes too small and a cable gauge becomes too large, and there is no appetite or need to move towards fiber or middle-of-row architectures. Cloud customers will be the first to proceed with the overall enterprise market following when they transition to higher speeds. These short distant server interconnects (up to 7m) account for over 50% of all data center network interconnects.
Beyond server access, customer preference continues to shift away from large Modular chassis and toward Fixed 1RU systems. At the same time, the aggregation and core layers are being moved closer together in a move away from the physical blast radius to the virtual blast radius. These trends allow aggregation switches to connect at short distances, not necessarily across a whole data center. As a result, these Distributed Disaggregated Chassis (DDC) architectures grow in volume each year and are prevalent in the three major verticals of Enterprise, Cloud, and Service Provider. DDC doesn’t need fiber for short distances, and one can think about active copper cables replacing the modular switch fabric in a chassis.
Last year, 90% of servers used DAC cables for connectivity, with the remaining 10% being a mix of 10G-Base-T, fiber, blade server enclosures, and other technologies. By 2026, we expect over two-thirds of the Cloud server market to be active copper (Figure 1). Furthermore, the percentage of 100 Gbps and above will be even higher, with almost the entire market at that speed using active copper. From a revenue perspective, the market will quickly exceed $1B and can exceed $3B by 2026, far higher than the DAC market it will replace.
Active copper cables fall into 2 main categories, ACC and AEC. ACC cables use an analog redriver approach to recover the signal that is attenuated by the losses in the copper conductors. AEC cables use a DSP retimer approach to accomplish the same. While AEC technology is able to achieve longer lengths, it also uses significantly more power. Spectra7 is a leader in the ACC segment.
The industry has moved technologies in the past, with the 1 Gbps to 10 Gbps as an excellent example of a drastic and rapid shift for server connectivity. The market for 1 Gbps was dominated by 1G-Base-T, but the need for 10G shifted rapidly to DAC, with 10G-Base-T never gaining traction beyond some enterprises. 100 Gbps should have the same trend, where there is a rapid inflection over the next 2-3 years, first starting with the Cloud providers and then shifting to the broader enterprise market.
Cloud providers currently are examining when to transition away from DAC, and we expect to see many new designs between now and the end of 2023 transition away from DAC. This times well with servers moving to 100 Gbps links and new 25.6T and 51.2T switch ASICs. While Cloud providers tend to be secretive, we expect to see demonstrations throughout the year as both cable and switch vendors demonstrate products and interoperability.
– Alan Weckel, Founder and Technology Analyst at 650 Group.