If the key productivity in the era of computing power digital economy is an important cornerstone of the digital and intelligent transformation of the whole society, then transportation capacity is the key to transmitting information and a bridge connecting users, data, computing power and applications. It is the key bearing base in the intelligent era, and it is crucial to realize the integrated scheduling of computing resources. In the digital world, the rapid transfer and efficient sharing of data is essential. High-speed network connections, stable bandwidth, and low-latency communication are all manifestations of capacity.
Computing power and capacity are interdependent. Computing power requires strong transportation capacity to support rapid data transmission and flexible scheduling to achieve efficient utilization of computing resources. At the same time, the increase in transportation capacity also requires the support of computing power to handle more data and complex computing tasks.
There is a promising way to replace the localization of switches, optical modules and inter-chip communication chips
According to Winsoul Capital, switches, optical modules, and inter-chip communication chips are the foundation for building network capacity, which directly affect key performance indicators such as data transmission efficiency, energy consumption, and latency, and play an important role in supporting the development of computing power services and applications. A switch is a network device used for electrical (optical) signal forwarding, which can provide an exclusive electrical signal path for any two network nodes accessed. A switch is the core device in a packet switching network, which can forward and exchange data packets according to the destination address to achieve communication between multiple devices. Optical module is an important part of optical fiber communication, and is an optoelectronic device that realizes the functions of photoelectric conversion and electro-optical conversion in the process of optical signal transmission. The server and the switch are interconnected through optical modules, which support high-speed and long-distance signal transmission. Whereas, chip-to-chip communication chips usually refer to integrated circuit chips that are used for communication between different chips. The chip-to-chip communication chip realizes the communication between modules through high-speed serial links and other means, which accelerates data transmission speed, reduces energy consumption, and reduces the need for external communication lines. It plays a crucial role in chip design, especially in the main components of multicore technology, and the network-on-chip (NoC) approach enables a completely new approach to on-chip communication that significantly outperforms traditional bus-based systems.
Figure: There is still a lot to be done for the localization of switches, optical modules and inter-chip communication chips
China has achieved a high localization rate in the field of low-end optical modules, for example, the localization rate of low-end optical modules below 10Gb/s has reached 90%, and the localization rate of 10Gb/s optical modules is 60%. However, in the field of high-end optical chips, especially high-end optical modules and components of 25Gb/s and above, the localization rate is extremely low, only 10%. The global Ethernet switch chip market has been monopolized by international giants such as Broadcom for a long time, and the technology accumulation and market share of Chinese enterprises in this field are relatively low, and the core chips still rely on imports. With the continuous progress of technology and the growth of market demand, the development trend of domestic substitution is clear. Although the penetration cycle of silicon photonics, CPO, OIO and other technology evolution directions still needs to be verified, the impact on industry participants and industrial competition is clear. In the future, optical module manufacturers that can provide a full range of solutions covering these technologies will become the focus of customers when selecting suppliers.
The explosion of demand for AI computing power has led to a surge in demand for connected hardware
AI computing power has a large amount of data traffic in the data center, resulting in a significant increase in the rate and number of optical modules, and a corresponding increase in the number of ports and port rates of switches. According to Winsoul Capital, the number of XPU computing power servers in a single data center has grown from 1,000 to 10,000, and now it has grown to one million due to the popularity of AI. The number of nodes that need to be connected increases exponentially with XPU, and the demand for data center interconnection hardware explodes. According to IDC data, the global switch market size will be 308 billion yuan in 2022, a year-on-year increase of 17%, and the CAGR is expected to be about 4.6% from 2022 to 2027. China's switch market size is 59.1 billion yuan, a year-on-year increase of 9.5%, and the growth rate is expected to be higher than the global growth rate in the next five years, stable at 7%-9%. According to Winsoul Capital, the data interaction rate per second of nodes has doubled every four years to doubled every two years, accelerating the upgrade and growth of switches.
Figure: The explosion in demand for AI computing power has led to a surge in demand for connected hardware
The explosion of demand for AI computing power has led to a surge in the demand for interconnection hardware, in which switches, as the core equipment of the network, account for a significant increase in value. With the continuous development of AI technology and the expansion of application fields, the role of switches in data transmission and processing will become more important. In the future, the switch market will continue to maintain a growth trend and usher in more development opportunities and challenges.
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