As hyperscalers continue to increase capital expenditures to build AI infrastructure, many suppliers in the supply chain are working at full capacity. During the earnings call in December 2025, Broadcom reported an AI switch chip (including the new Tomahawk 6) backlog of $10 billion. In the most recent quarter, NVIDIA reported a 3.5x year-over-year growth in its networking revenue, with records set for NVLink Scale-up as well as Ethernet and InfiniBand Scale-out. Overall, data center switch chip sales are projected to grow by 86% year-over-year in 2026, with LightCounting’s forecast indicating a five-year compound annual growth rate of 36%. Although Scale-up switch chips are expected to grow the fastest, Ethernet will continue to expand at a projected compound annual growth rate of 32%.

As shown in the figure below, driven by NVIDIA GPU servers (such as the Blackwell generation NVL72), Scale-up switching chips have become a sizable market. This forecast covers the next three generations of NVLink, corresponding to the Rubin, Rubin Ultra, and Feynman GPU generations. Following the GTC conference in March 2026, NVIDIA announced the NVLink8 CPO, which LightCounting incorporated into its Scale-up switching chip forecast. Since the value of co-packaged optics is included in the CPO switching chip price, this change significantly boosts sales projections for 2029 and beyond. Although NVIDIA’s NVLink switching chips will still dominate the future market, alternatives like UALink and Scale-up Ethernet (ESUN) are expected to form a substantial private-label market starting in 2026. Overall, the firm forecasts a compound annual growth rate of 53% for Scale-up switching chip ASICs.

In addition to the electronic packet switching chip (EPS) market segments for Ethernet, InfiniBand, and Scale up networks, the report also predicts the optical circuit switch (OCS) market. The prediction assumption for OCS is that in addition to Google’s continuous deployment, other cloud companies will also begin to adopt this technology. This forecast includes sales of OCS hardware, which is MEMS based devices manufactured internally by Google, as well as sales of proprietary brands to Google and other cloud service providers. Despite Google’s leading position in recent consumption, it is expected that by 2031, the total demand of other cloud companies will surpass Google. The organization has seen many private label suppliers enter this market to support broader deployment. This prediction is further subdivided by the number of ports: 64 ports and below, 128 ports, 300 ports and above.

The forecast for Ethernet switching chips includes ASIC sales divided by switching capacity (up to 204T) and SerDes channel shipment forecasts divided by speed (from 50G to 400G). Although significant investments in AI infrastructure are driving overall network system growth, not all technologies benefit equally. This new report explains the dynamics of network switching, scale up interconnection, and supplier ecosystems.