Mellanox chases Intel for top spot in Ethernet adapters

Mellanox is being acquired by NVIDIA but has asserted itself already with cloud providers in the Ethernet adapter business. (Mellanox)

Mellanox came within 5 percentage points of Intel’s leading share of the Ethernet adapter business in the first quarter of 2019, according to IHS Markit.

Intel had a 25% market share, while Mellanox reached 20%.  To get there, Mellanox climbed up by 3 percentage points in the first quarter largely due to strong demand from cloud service providers, IHS Markit said on Aug. 15. Meanwhile, Intel dropped by 6 percentage points compared to the first quarter of 2018.

The total Ethernet adapter equipment market in the first quarter was $346.5 million, comprised of $121 million from cloud providers, $63 million from telcos and $162.5 million from enterprises. Intel sales reached $87 million, and Mellanox sales were $69 million.

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Of that $346.5 million, $182 million was from offload adapters, $42 million from programmable adapters and $123 million from basic adapters.

Cloud Service Providers have been using adapters with CPU offload capabilities for processing networking and storage protocols. Also, they want higher networking speeds ranging from 25 Gigabit Ethernet to 50 GE and 100 GE.

In addition to its first quarter showing, Mellanox was initially showing strong growth in the second quarter for 25 GE and 100 GE programmable adapters and 25 GE and 40 GE offload adapters. IHS Markit said it will publish a second quarter report on Sept. 16 to show whether Intel was able to keep its top spot.

The 25 GE+ Ethernet adapter market is expected to grow 39% in all of 2019.

“Growth in artificial intelligence and other data-intensive workloads was a definitive trend in the first quarter of 2019 and this was reflected in strong demand for offload Ethernet adapters,” said Vladimir Galabov, principle analyst at IHS Markit. Offload adapters were more than half of the total Ethernet adapter market for the first time in the first quarter.

Hyperscale cloud providers are leading the demand to 100 GE adapter speeds, which grew by nearly 300% in the quarter over the first quarter of 2018.

Galabov attributed Intel’s decline in the first quarter to its aging product line comprised of 1GE and 10 GE adapters. However, Intel is updating its portfolio in late 2019, which could help.

After Intel and Mellanox, Broadcom had 15% of the Ethernet adapter market, followed by Marvell and Amazon, both with 8%. Amazon has developed an ASIC to power its own Ethernet adapters for Amazon servers based on an acquisition of Annapurna Labs in 2015.

For all of 2019, Galabov is forecasting $1.8 billion in Ethernet adapter sales, up by 16% due to the transition to higher speeds and adapters with CPU offload capabilities.

In March, NVIDIA said it had reached an agreement to acquire Mellanox for about $6.9 billion. The deal is expected to close by the end of 2019.

RELATED: NVIDIA eyes Mellanox for $6.9 billion acquisition

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