Operators Need DSP Diversity as Market Size About to Expand Significantly
The DSP market is entering a significant expansion phase driven by new and expanding workloads and additional speeds and feeds. Traditionally, most data center DSPs were for switch-to-switch links inside the data center. However, with cloud providers pushing the envelope of scale and footprint and passive copper cables reaching the end of their life cycle, we see significant new market opportunities for DSPs. At the same time, more speeds continue to operate, causing new market demand and opening up the DSP diversity market.
ZR/ZR+ – DCI DSP Opportunity Expanding in Multiple Vectors
ZR technology is entering its third generation with 800 Gbps and ZR+ pushing distances to 1000 km. At the same time, 100 Gbps ZR is surging in service provider (SP) networks. ZR modules use coherent DSPs and significantly reduce costs compared to traditional transport systems. Cloud providers see third-generation ZR as a significant investment cycle to support a more distributed data center footprint and AI/ML expansion. All four Hyperscalers plan to deploy ZR technology in substantial volumes, compared to two in the previous upgrade cycle. At the same time, newer versions of 100 Gbps ZR are showing up in SP networks that see them as a great technology to support mobile backhaul, residential broadband, and enterprise. An improved cost structure and government broadband funding will help drive the traditional SP demand. These factors should push the ZR market to over one million DSPs annually.
Figure 1: Arista Networks showing 800ZR modules running the Marvell Orion from different Tranceiver Suppliers
AEC – New DSP Opportunity
The majority of server to top-of-rack connections today are passive DAC cables. The market must move away from passive DAC cables as the server pushes higher speeds and moves from 25 Gbps – > 50 Gbps -> 100 Gbps SERDES. AEC uses a “light” DSP to extend the copper life. It is important to note that for an extended period, servers have been stuck on PCIe Gen 3 for nearly a decade, and it is rapidly transitioning through Gen 4 to Gen 5 and Gen 6. Each of those transitions doubles the bus speed, so the server to Top-of-Rack speed will increase more rapidly over the next five years than in the previous ten years. Active copper cables will be measured in millions per year as the server market migrates to higher speed. AEC is a brand new market opportunity for DSPs.
Rethinking PAM4 DSP Deployments
This past year, there has been a lot of concern about the emergence of co-packaged optics (CPO) and linear-drive pluggable optics (LPO). Both are still in the experimental stage. PAM4 DSP-based pluggable modules will remain the standard in data centers for 51.2T and 102.4T switching and extend to at least the 3.2 Tbps generation of port speeds. Pluggables will evolve. Silicon photonics—which combines the analog and digital components that complement DSPs—will gravitate from ZR modules to inside-the-data-center modules to reduce power while increasing bandwidth. For example, Marvell recently debuted a SIPho device capable of 64 Tbps (Figure 2). As the number of links in the data center continues to explode and AI/ML drives multiple networks, we should expect DSPs for transmit-only modules to also come to the market.
Figure 2: Marvell 3D Silicon Photonics Engine
Diversity is Key for DSPs
Diversity will take two paths for DSPs as we advance. First, few companies can compete at the high end (most advanced DSPs for speed and distance). We expect this to remain the same for the next generation of DSPs. However, with all these new use cases, vendors will enter the DSP market at lower speeds as there will be multiple markets. For example, ZR will see substantial volumes at 100 Gbps, 400 Gbps, and 800 Gbps through 2026.
The second path will be in new markets, such as the AEC market above, where vendors will enter to pursue new market opportunities. We view both these trends as positive for the DSP market. The market size is about to increase significantly as ZR and AEC create new DSP opportunities and the transition of higher speeds accelerates.
Marvell is the only major vendor that produces both coherent DSPs for ZR modules, and the PAM4 DSPs for server-to-rack connections, and AEC is the current market share leader for merchant products in both. Others specialize in one or the other. While market shares are difficult to predict, rising volumes should benefit everyone and create a robust ecosystem of suppliers.