The global ethernet controller market size was valued at USD 9.62 billion in 2022. It is estimated to reach USD 18.01 billion by 2031, growing at a CAGR of 7.22% during the forecast period (2023–2031). The key aspects bolstering the expansion of the ethernet controller industry are adopting EtherCat for a real-time network of industrial automation control and adopting USB ethernet controllers. Key players operating in this market are continuously innovating the product following consumers' preferences, creating market growth opportunities.
An Ethernet controller is a device containing an integrated circuit that controls Ethernet communications. Ethernet is the method by which most computers communicate with one another. Similarly, most gadgets connect to the Internet in this manner. The Internet cable connecting to the computer transfers data to the Ethernet controller, which decodes the data and converts it into a format the computer can understand. Most modern computers have built-in Ethernet controllers installed on the motherboard. Ethernet controllers inspect each data packet to determine whether it is intended for the local computer or another computer on the network. When the data is designated for the nearby computer, it undergoes decoding and is thereafter transmitted to the processor. In the event that the data is meant for another machine within the network, it is subsequently disregarded.
|Market Size||USD 18.01 billion by 2031|
|Fastest Growing Market||Asia Pacific|
|Largest Market||North America|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends|
Ethernet for Control Automation Technology (EtherCAT) is based on the CANopen protocol and Ethernet. However, it should be noted that industrial automation control systems differ from internet or network communications in that they are specifically tailored for this purpose. EtherCAT is a swift and deterministic network that processes data employing dedicated hardware and software. It utilizes a full-duplex, master-slave configuration and adapts to any topology. It can also process 1,000 I/O points in 30 microseconds and communicate with 100 servo axes in 100 microseconds.
Given the advantages of EtherCAT, several companies are developing innovative processes and applications for various end-user verticals. For instance, as a significant contributor to the 3D laser processing technology, Trumpf offers comprehensive machines and systems with optimally coordinated components, beam sources, and beam components. Its new solutions rely on Industrial PC technology and EtherCAT components to drive new performance levels. Such factors boost market growth.
Massive amounts of data are received and sent to the data center every second. It takes a reliable, fast networking infrastructure to handle enormous data transport. The ethernet controllers facilitate the efficient management of vast amounts of data. Thus, the rise of data-intensive applications such as big data and cloud computing is anticipated to expand the ethernet controller market.
The market is expected to create a roadblock for itself to update faster on technology, as such long-duration contracts with extensions saturate the market, thus impacting its growth. In instances where industry trends suggest the use of novel and emerging Ethernet controllers by solution and service providers, the utilization of long-term contracts is counterproductive within the market. Moreover, the growing competition in the market impacts the profit margins and growth of the existing vendors. The level of competition between suppliers is so high that Ethernet controller products are transitioning to be commoditized worldwide. These factors restrain the market growth.
A USB-to-Ethernet converter is useful in a variety of circumstances. For example, a user's laptop's Wi-Fi option may be experiencing technical difficulties, or the user may discover that the Wi-Fi is disabled for security reasons in specific locations despite users requiring internet access. In such situations, the utilization of an Ethernet connection along with a basic adaptor would be adequate. A cable for connectivity has the advantage of a swifter and more reliable connection.
The companies are developing and providing new products or incorporating new features into their existing products to cater to the needs of the different end users. For instance, Biopac Systems Inc. provides products like USB 2.0 to Ethernet adapters, 10/100 Mbps. The USB 2.0 Ethernet Adapter connects the user's computer to a 10/100 Mbps network via a USB connection, eliminating the need to open the computer case to add an internal Ethernet card. The adapter's USB 2.0 (480 Mbps) compatibility offers real 10/100 Mbps network speed with no compromises. Such developments are expected to create opportunities for market growth.
North America's ethernet controller market is anticipated to exhibit a CAGR of 7.57% during the forecast period. With the expansion of 5G networks and their expanding applications, Ethernet controllers for 5G infrastructure will be in high demand in North America. Ericsson's Mobility Report 2020 predicts that there will be more than 195 million 5G subscriptions in the United States by 2026 and that 5G will account for approximately 71.5% of the US mobile market by 2029. The burgeoning growth of the 5G sector in the United States will result in a heightened need for Ethernet Controllers.
Another important reason for the growth of the market in the North American region is the region's digital transformation as the region embraces the cloud. For instance, the Canadian government has been working on a cloud adoption strategy as part of its "cloud-first" adoption strategy, in which the cloud is the preferred option for providing IT services and the public cloud is the preferred choice for cloud deployment and is developing a security risk management strategy for cloud adoption that protects Canadians' data and privacy. Such trends will drive the studied market in the region.
Asia-Pacific is estimated to exhibit a CAGR of 8.23% over the forecast period. Asia-Pacific is the fastest-expanding region in the market. Japan dominated the regional market. Internet traffic in Japan is steadily growing due to increasing digitization and increased time spent at home during the pandemic. According to International Telecommunication Union, Japan had 117.4 million internet users as of January 2021. Similarly, according to the Statistics Bureau of Japan, as of August 2020, the usage rate of smartphones was the highest (68.3%), followed by computers (50.4%).
Furthermore, as of August 2020, 47.5% of enterprises introduced telework. This doubled from 20.2% at the end of September 2019. The most frequent telework pattern was working from home (87.4%), followed by mobile work (33.4%) and working from a satellite office (10.7%). The increasing internet penetration and the demand for consumer electronics, like laptops, tablets, and smartphones, are expediting the demand for the market in the region.
Europe is envisaged to account for a considerable market share. Germany is leading Europe in artificial intelligence (AI), with top businesses working with top academic institutions in the Cyber Valley in southwest Germany to create ever-more-powerful computers with a wide range of functions. Local AI innovation has already been established in Germany; the development and commercialization of AI technologies for applications in the healthcare, automotive, and manufacturing sectors is a growing market for AI and Deep Learning in Germany and is expected to drive the market in the region.
In addition, France and Germany decided to expand collaboration in the field of 5G applications in 2020, and in early 2021, they published a call for funding of innovation projects. According to the German Ministry of Economic Affairs, France and Germany planned to sponsor four 5G applications for private networks with a total of EUR 17.7 million (USD 20.1 million) in January 2022. The initiative intends to create a cutting-edge European ecosystem for private networks in the 5G telecommunications space, thereby driving the Ethernet Controller market.
The Rest of the World region consists of Latin America and the Middle East and Africa. The companies in the Mexican region are developing new products so that they can access local networks, which will drive the Ethernet controller market in the region. For instance, Arelion announced the expansion of its network in Mexico by incorporating two additional Points of Presence (PoPs). This development is expected to enhance the existing ecosystem in Mexico City (CDMX). The collaboration will enable local access to Arelion's top-ranked global backbone, AS1299, in the MEX|5 and MEX|2 Data Centers managed by KIO Networks. This will bring Arelion's total PoPs in Mexico to six.
In addition, businesses in Mexico City may now use Arelion's number one ranked global backbone, AS1299, and local availability of high-speed IP Transit, Cloud Connect, DDoS Mitigation, Ethernet, and IPX services for operators, content providers, and corporations. The growth in the network infrastructure in Latin America is expected to drive the demand for ethernet controllers over the forecast period.
Based on bandwidth type, the global market is bifurcated into fast ethernet, gigabit ethernet, and switch ethernet.
The fast ethernet segment dominates the global market share and is expected to exhibit a CAGR of 6.91% over the forecast period. The fast ethernet controller has evolved with the rising demand for continuous internet connectivity while being geographically dispersed. The Fast Ethernet Controller requires an external interface adapter and transceiver function to complete the interface to the Ethernet media. It supports half-or full-duplex operation on 10Mbps, 100Mbps, and 1000Mbps Ethernet networks. Similarly, the increasing need for portability to support sustained demands of 100 Mbps has driven the rise of fast ethernet controllers.
The need for Gigabit Ethernet Controllers rises due to its high focus on working at higher speeds, almost ten times its predecessor. The applications of Gigabit Ethernet Controllers are found in rack-mount or backplane units for Ethernet over fiber. These fiber optic cables are the cornerstone of delivering ultra-high speed. In addition, the demand for fiber optic cables has largely surged across geographies, driving the ancillary demand for gigabit ethernet controllers. As per the Statistics Bureau of Japan, the revenue of Optical fiber cables, including telecommunication composite cables in Japan, will amount to approximately USD 0.1 billion by 2024. The growth of optical fiber cables is expected to positively influence Gigabit Ethernet controllers' deployment.
Based on function, the global market is divided into PHY and integrated.
The PHY segment is the largest revenue contributor to the market and is expected to exhibit a CAGR of 7.55% throughout the forecast period. The physical layer of ethernet controllers is a critical component. Unlike Integrated Ethernet Controllers, the PHYs are discrete components. This component is a transceiver for transmitting and receiving data or Ethernet frames. In addition, ethernet covers Layer 1 (physical layer) and a portion of Layer 2 in the OSI model (data link layer). The physical layer specifies electrical signal types, signaling rates, media and connector types, and network topologies. Owing to the growing focus on security features, the physical layer is critical to the controllers. The PHY is responsible for encoding and decoding data between a purely digital system and the signal transmission medium.
Integrated Ethernet Controllers are leveraging the growing demand for embedded devices in industrial and consumer appliances. The integrated controllers integrate an IEEE 802.3 physical layer for twisted-pair Ethernet applications. Similarly, the cost-effectiveness has encouraged the adoption of integrated ethernet controllers in servers, routers, and others. The increasing demand for 5G drives the demand for integrated ethernet controllers. 5G network, being the next generation of mobile networking standards, is poised to deliver an enhanced end-user experience by offering new services and applications through seamless coverage, high data rate, low latency, and considerably improved performance and effective communications.
Based on end-users, the global market is segmented into servers, routers and switches, consumer applications, and other end-users.
The servers segment owns the highest market share and is estimated to exhibit a CAGR of 7.82% during the forecast period. The server sector is essential to many mission-critical and client-side corporate computer activities because servers power data centers and support cloud environments. As businesses seek to power big data and advanced workload requirements, demand for higher-performing servers continues to climb. In addition, the proliferation of cloud computing, artificial intelligence (AI), big data, and data centers has substantially increased the need for servers. Therefore, there is a corresponding rise in the demand for Ethernet controllers, as they play a crucial role in facilitating the efficient functioning of these servers.
Routers and switches are vital network components and have evolved beyond their original connecting role. Routers and switches have advanced to the point where inexpensive and mid-range solutions now have functionalities previously only seen in business data centers. Routers are devices that send data packets over a network. In addition, routers serve the purpose of establishing connections between many networks. A network switch serves the purpose of interconnecting devices within a network and facilitating the transmission and reception of data through the utilization of packet switching. The Internet of Things is assisting the router and switch infrastructure market to grow as the trend increases data and the requirement for network infrastructure to do so, which in turn assists the router and switch infrastructure market to flourish.