Prospect of Industrial Switch Market

Industrial Switches occupy the vast majority of the market in China's network equipment market. In recent years, the market size of industrial switches has maintained a steady growth trend. In 2020, China's ethernet switch market will be about 4.11 billion US dollars, with a year-on-year growth of 2.49%. It is expected to further increase to US $6 billion in 2022.

The industrial switch is a very important and key network equipment in the data center. SDN (Software Defined Network is a kind of Network design idea, or a kind of design idea that pushes back and starts again) promotes the white box mode. As the backbone of the internal data transmission channel of the data center, the capacity and rate of the industrial switch determine the ability that the data center can provide externally. The data center consolidates with the help of the switch and the internal dense server array to provide external services such as storage and computing power. The east-west direction is the traffic application scenario with the largest proportion in the data center. The bandwidth of the internal data transmission channel largely determines the performance of the overall capacity of the data center. Industrial switches in the current market can be divided into bare metal switches, white box switches and traditional commercial switches according to the internal design interface of software and hardware.

Bare metal switches only contain hardware, and users can purchase or select software operating systems independently. This has been the way servers have been built (sometimes PCs and laptops) for many years. The user selects the application to run, and then selects the most suitable operating system to support the application, and then selects the hardware on which all programs can run.

The white box switch is a concept opposite to the traditional Cisco, Huawei and other brand industrial switches. Traditional black box devices (i.e. brand switches) are completely developed in a closed way from software to hardware, resulting in low interoperability between devices from different manufacturers. It is difficult for the operation and maintenance team to control uniformly and locate faults quickly. At the same time, the closed architecture of black box devices has brought considerable obstacles to the upgrading and function expansion of the network in the later stage.

The white box switch is an open network device with software and hardware decoupled. It is usually used together with SDN. It is flexible, efficient, programmable, and can significantly reduce the cost of network deployment. The white box switch is divided into hardware and software. Hardware generally includes switching chips, CPU chips, network cards, storage and peripheral hardware devices, and its interfaces and structures need to conform to OCP standardization specifications. Software refers to the network operating system and its network applications.

The concepts of white box switch and bare metal switch are often confused. The difference between the two is that the white box switch has an operating system installed. It is still an open switch, because the operating system and hardware are not integrated as traditional switches, which is equivalent to buying a bare metal switch and an operating system in a package.

The upstream of the industrial chain of industrial switches is mainly composed of resource providers such as PCB/electronic components, operating systems, switching chips, CPUs, photoelectric chips and optical modules. As downstream customers of industrial switches include cloud computing manufacturers, telecom operators, other enterprises and home users, there are differences in requirements for equipment performance and solution complexity, so the downstream market is differentiated. There are mainly three types of players in the switch market, namely brand switch, white box switch and bare metal switch manufacturers.

Industrial switches provide many network interconnection functions. Industrial switches can economically divide the network into small conflict domains, providing higher bandwidth for each workstation. The transparency of the protocol makes the industrial switch directly installed in the multi protocol network when the software configuration is simple; The industrial switch uses the existing cable, repeater, hub and network card of the workstation, without the need for high-level hardware upgrading; The industrial switch is transparent to the workstation, so the management cost is low, and the operation of adding, moving and changing network nodes is simplified.

The research report shows that in 2021, the domestic switch market will reach 5.3 billion US dollars, accounting for about 1/6 of the global scale, with a year-on-year growth of 17.5%. It is expected that the market will exceed 6 billion US dollars in 2022. Among them, in the first half of 2022, the market size of China's Ethernet switches will reach 2.583 billion US dollars, about 18.459 billion yuan. At the same time, under the tide of the digital economy, the traditional industry is accelerating its integration with the industrial Internet and the Internet of Things, and promoting the digital transformation, which will further enhance the market demand for networks and industrial switches. It is expected that the market size of industrial switches will still maintain a steady growth momentum for a long time in the future.