51.2 Tbps Switch ASICs to Drive the Migration to 800 Gbps and 1.6 Tbps Starting in 2H22
NVIDIA continues to drive products and solutions at a rapid pace. They continued to push the boundaries and accelerate the pace of innovation in the data center through the recent GTC announcements. With the launch of Spectrum-4, we got to see NVIDIA’s first Ethernet Switch announcement and what they were busy developing since acquiring Mellanox. Keeping with the accelerating theme, NVIDIA clearly accelerated the pace of Innovation and proudly showcased Spectrum-4 at GTC.
Over the next five years, 51.2 Tbps ASICs will be responsible for over $20B in Data Center Switching revenue. About 2X the size of the 100 Gbps upgrade cycle and 4X the size of the 400 Gbps upgrade cycle. This class of ASIC is critical to allowing data centers to scale as more workloads become hardware accelerated. Hardware acceleration can come via the server, NiC, or DPU and causes networking bandwidth to double every year compared to the more traditional growth of 30-40%.
NVIDIA’s 51.2 Tbps ASIC
NVIDIA’s Spectrum-4 announcement included many new and first-to-market capabilities. It was the first 51.2 Tbps ASIC announced in the market and the first switch that can do 64 ports of 800 Gbps from a single ASIC. It also supports 1.6 Tbps speeds, another first and the preferred speed for the two most prominent Hyperscalers.
In addition, NVIDIA announced Spectrum-4 as a fully integrated Switch that will sample later in 2022 and begin shipping in 2023. The chip will be produced at TSMC in the 4N process. NVIDIA did over $1B in Ethernet Switch and NIC revenue in 2021.
It's All About The SERDES
NVIDIA will be using its own, homegrown, 112 Gbps SERDES. SERDES has always been a challenge in switch development, with many ASIC companies having to integrate 3rd party SERDES. However, we view vertically integrated as a source of differentiation and will become more common in the future as ASICs increase in speed. SERDES will also be a key to adding additional IP blocks and photonics to the networking ASIC, as those markets evolve.
The Speeds And Feeds Race
NVIDIA’s Spectrum-4 introduced several features that help it distinguish and route traffic. These traffic classes are often described as elephant and mouse flows. The key at a market level is that AI and accelerated computing put a considerable burden on the network. So AI networking switches need to keep pace with this new class of ‘elephant flow’ traffic and not slow or drop packets. At the same time, accelerated traffic is growing as a percent of traffic. Multiple 100G ports are already standard at the RFP level for AI workloads. 12.8 Tbps and 25.6 Tbps ASICs can not keep pace with a fully loaded AI cluster.
While the announcement focused on NVIDIA examples, such as connecting Spectrum-4 to NVIDIA Certified OVX OEM servers, we view the market as benefiting from NVIDIA taking networking seriously. Cloud customers have always requested multi-vendor at the ASIC and system level, and the ability to collapse networking tiers with 51.2 Tbps will be a critical driver to adoption. We, therefore, expect Spectrum-4 to apply to the whole data center, not just focused on the high-end or NVIDIA-connected solutions. We are excited to see this switch show up in 2H22 in the customer’s hands.
Mavenir held its annual analyst event this week and highlighted some important information highlighting its progress in transitioning to a maturing ecosystem player in the telecom equipment industry. The company highlighted its recent Koch Brothers $500M investment; existing investors include Intel/Nvidia and Siris Capital, who remain majority equity holders. The company highlighted that it grew revenues and bookings in the mid 20’s percent year-over-year in its Fiscal 2020, an impressive figure. Two main themes came from the show. First, the company’s RAN portfolio is picking up steam. Second, the company’s portfolio now spans very wide, from telecom core to RAN.
The RAN portfolio has made significant progress. The company claims over 20 deployments in 14 countries. And, Mavenir has demonstrated the capability to deploy on AWS, IBM Cloud, Microsoft Azure, Oracle Cloud, Google Cloud, and VMWare. The company spent a great deal of time reviewing definitions of various Open RAN terminology, to address confusion, spanning from vRAN, O-RAN, C-RAN, Cloud-RAN, and Open vRAN. We’ve seen many public statements from Mavenir, its competitors, operators and pundits, alike, espousing the various benefits of some or all of these systems. We think the point Mavenir was making at its conference is that Open vRAN is the most open, interoperable system. When operators enable open systems, of course, it allows Mavenir and other vendors to bid on deals for networks that have existing equipment from traditional vendors like Ericsson, Nokia, Huawei, and ZTE. We see Mavenir’s efforts to work with various infrastructure companies and systems like AWS and VMWare as a means of gaining a foothold with operators who are trialing or in the early stages of deploying these various infrastructure systems. Speaking of partners, the company claims it has relationships with nearly 15 Remote Radio Unit (RRU) players. The company says it can deliver Massive MIMO capabilities to customers, which means that its RAN systems can satisfy what would be considered mainstream 5G use-cases; this represents very significant progress over last year’s RAN capabilities.
Mavenir’s portfolio is extensive. The company made separate presentations about the following topics: RAN, OSS, Radio, Packet Core, Mobile Core, BSS/Digital Enablement, Security, Private Networks, and Enterprise over three days. With over 5,000 employees spanning the globe, exposure to the most relevant parts of the mobile infrastructure industry, Mavenir is a serious contender for deals. The company also highlighted that its telecom core technology uses modern programming techniques that enable it to operate on cloud infrastructure; among these are fully containerized micro-services design. The company shared that most microservices file sizes are under 25 Mbytes, evidence that the systems are designed as microservices (and can load fast).
The fact that in April 2021, well-known Koch Bros made a $500M “strategic minority” equity investment in the company is an important validation of Mavenir’s place in the telecommunications industry. We see the investment as a reinforcement of the company’s balance sheet and an opening to new customers.
This week's MWC Barcelona 2021 had several themes; the most important was that several outsiders to the telecom industry were ever-present. The new entrants – the party-crashers - included Starlink, Microsoft Azure, Amazon Web Services, Google Compute, and NVidia. These new players are forcing change either through economics, new technology, or new regulatory frameworks, or combinations thereof. We’ll touch on the importance of these crashers and then circle back to a few other ongoing themes that continue to remain relevant in this article.
Satellite broadband, while not exactly a mobile technology, will catalyze significant changes to the mobile industry. Low Earth Orbit (LEO) satellite services, evangelized today by SpaceX-owned Starlink, announced plans to spend as much as $30B in building out its constellation over its lifespan. Yet, it will reach users across the globe. Elon Musk said Starlink is in beta in 12 countries, and it plans to have ½-million users in the next 12 months. The billionaire highlighted that Starlink’s ability to reach rural populations is unlike that of terrestrial players. We think the rural reach of LEO broadband is precisely why Starlink will be so important. Musk’s pitch to the mobile industry was that of a partnership – he said that Starlink is partnering with 5G MNOs to offer satellite backhaul and rural broadband services. We view satellite broadband, and later 3GPP satellite, as critical components in the telecommunications industry, and therefore we chose to write about satellite first in this article.
All three hyperscalers, Azure, AWS, and GCP, made a splash at MWC21. As a group, these infrastructure providers have already changed the way telcos operate. In fact, the hyperscalers’ architectures were the inspiration behind the decade-old telco push for Network Functions Virtualization (NFV). But, these days, hyperscalers’ operations are more than an inspiration to the telcos. MNOs are now moving some of their workloads to hyperscaler infrastructures. The evolution of these workload migrations to hyperscalers is moving in three phases, phase 1, the back-office, then phase 2, telecom core, and last, phase 3, the access layer. In the weeks leading up to MWC21, we’ve seen progress on all three workload migrations, including that on Mobile RAN. Incoming AWS CEO Adam Selipsky said at MWC that AWS is talking to “virtually every telecom operator.”
Some examples of announcements made surrounding the MWC show include:
With Open RAN capabilities come the possibility that MNOs can source various RAN components from multiple vendors. Rakuten has already technically demonstrated multi-vendor sourcing (Altiostar baseband and Nokia and NEC radios). In addition to system-level multi-vendor interoperability, in previous years, multiple semiconductor companies had been bolstering their RAN offerings (Marvell, Qualcomm, EdgeQ). Marvell had previously crashed MWC (MWC19 and MWC20) and is now a RAN supplier to Samsung and Nokia. For MWC21, we saw yet another entrant to the RAN chip market, NVidia. NVidia has received pubic endorsements from Ericsson, Fujitsu, Mavenir, and Radisys. NVidia’s current chip offering is called “AI-on-5G,” and the company’s offering starts in 2021 as an “on a server.” NVidia’s next offering is expected in the 2022-2023 era and will be an “on a card” offering. Then, after 2024, NVidia will offer its “on a chip” offering.