Market Insight

The communications processor market benefits from uCPE and virtualization despite restricted CAPEX

January 18, 2019  | Subscribers Only

Kelson Astley Kelson Astley Research Analyst II, Embedded Processors, IHS Markit
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The communications processor market benefits from uCPE and virtualization despite restricted CAPEX

IoT, streaming media, and the eventual rollout of new 5G enabled devices are increasing data bandwidth, but reluctance to expand CAPEX budgets has led to constraints on network appliance growth. IHS Markit observes that this dichotomy has led to two growing trends in the communications equipment market. The first is virtualization (network functions, cloud native platforms, and containerized network applications running in virtual environments) on general-purpose servers. As virtualization has expanded, the second trend that has emerged is that network appliance and server OEMs are attempting to capitalize on the edge by offering a hybrid appliance that can be adapted and deployed at the edge of the network and on customer sites commonly referred to as Universal Customer Premises Equipment (uCPE). This is a type of micro-server architecture suitable for edge environments without the expense and bulk of full-size general-purpose servers.

IHS Markit defines uCPE as a device providing a pico-cloud, including compute, storage, and switching, capable of executing virtualized network functions. uCPE is a microcosm of the market as a whole; control functions being virtualized and packet-forwarding becoming more specialized. A uCPE device can take the place of standalone appliances such as routers, firewalls, and other network appliances by running software versions of them in virtual machines or containers rather than adding additional physical appliances. Starting in 2016, uCPE was being deployed mostly in test scenarios and while its initial introduction has been slow, we have seen this market explode with growth. Currently, many mainstream OEMs have uCPE products, including Dell, Ciena, HPE, Juniper and Huawei. To empower these devices, more powerful processors and more specialized coprocessors are being developed and integrated.

Implication for processors within uCPE

IHS Markit tracks the processors and coprocessors in uCPE and other physical network appliances via the Processors for Network Infrastructure Market Tracker. Through this, we have found that the forecasted explosive growth in uCPE equipment has translated into an equally exponential growth in processors. Processors in uCPE are forecast to grow from $847k in 2017 to $135M in 2022. This growth is attributed mainly to unit volume of application specific logic coprocessors to handle the data plane packet switching, and unit and ASP growth in 64-bit MPUs supporting performance required for virtual machines and containers supporting multiple control functions and virtualized network appliances. In addition to the actual processors, virtualization is also driving strong demand for memory capacity and lower latency memory access.

For more detailed insights, please refer to the Processors for Network Infrastructure Market Tracker database and report.

Processors for Network Infrastructure Market Tracker Database & Report

As part of the Power Semiconductor Intelligence Service, this report provides a comprehensive look at the processors and coprocessor usage in networking infrastructure applications. It segments the space into nine application markets, which subdivide into 36 classes, and covers twenty processor types. The Processors for Network Infrastructure Market Tracker provides four years of history and a five-year forecast.

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Semiconductors
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