AI Connectors & Cables Thrive in High-Speed Comm Era
Following the report "Smart Computing Future Series Eleven: The Bridge of High-Speed Connection, AI Server Connectors and Cables Welcome Upgrades," which analyzed the upgrade trends of connectors and cables, this article focuses on the market size and competitive landscape of high-speed backplane connectors, high-speed I/O connectors, and high-speed cables, which are three sub-products with higher value.
We are optimistic about the development opportunities for domestic manufacturers with strong technical capabilities and faster product verification speeds.
**Abstract** **High-Speed Backplane Connectors:** Interconnect technology and architecture upgrades drive demand growth, and domestic manufacturers accelerate self-developed replacements.
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1) On the demand side, the NVLink 5.0/NVSwitch 4.0 interconnect technology upgrade increases the transmission rate of high-speed backplane connectors from 112Gb/s to 224Gb/s.
Meanwhile, the new architecture NVL72/NVL36*2 requires five times more high-speed backplane connectors per GPU compared to the DGX architecture.
We estimate that the global market size for high-speed backplane connectors will be around 42.8 billion yuan in 2025, with a CAGR of about 37% from 2023 to 2025.
2) On the supply side, as overseas patent barriers weaken, domestic manufacturers are accelerating patent layout and importing precision manufacturing equipment, which has accelerated the replacement process of products with speeds of 112Gbps and above.
**High-Speed I/O Connectors:** Benefiting from optical module upgrades, domestic manufacturers enter the overseas supply chain through OEM.
1) On the demand side, with the increase in communication bus rates and optical module upgrades, the performance requirements for high-speed I/O connectors continue to rise.
We forecast that the global market size for high-speed I/O connectors (including cages) will reach 20 billion yuan in 2025, with a CAGR of about 90% from 2023 to 2025.
2) On the supply side, overseas manufacturers dominate the high-end market, while domestic manufacturers such as Yihua Shares and Fangxiang Electronics are continuously catching up by launching single-channel 112G products through independent research and development.
Companies like Ding Tong Technology and Yi Dong Electronics have entered the overseas high-quality supply chain through OEM.
**High-Speed Copper Cables:** Increased usage due to power consumption and cost advantages, domestic manufacturers accelerate the verification of high-speed products.
1) On the demand side, with the increase in computing power density, the power consumption of data centers per cabinet is growing exponentially, and the application of short-distance copper cable transmission solutions with obvious advantages in power consumption and cost is increasing.
2) On the supply side, the production process and equipment required for copper cables are relatively complex.
Industry chain manufacturers, including core wire suppliers, finished cable suppliers, and cable assembly suppliers, are continuously catching up with 224G high-speed products.
**Risks:** - The growth rate of capital expenditure by internet companies/operators is lower than expected.
- AI industry demand is lower than expected.
- The competitiveness of domestic suppliers is lower than expected.
**Introduction:** In the report "Smart Computing Future Series Eleven: The Bridge of High-Speed Connection, AI Server Connectors and Cables Welcome Upgrades," we discovered that high-speed backplane connectors, high-speed I/O connectors, and high-speed cables are sub-products with higher value through the calculation of the value of connectors and cables in the NVL72/NVL36*2 single solution.
In this article, we have sorted out the market size and competitive landscape of these three types of products.
We believe: 1) The market size for high-speed backplane connectors is large, and domestic manufacturers are accelerating self-developed replacements in products with speeds of 112Gbps and above.
2) High-speed I/O connectors mainly benefit from optical module upgrades, and domestic manufacturers have entered the overseas supply chain through the OEM model.
We are optimistic about the industry benchmark effect of core customers.
3) High-speed copper cables mainly benefit from power consumption and cost advantages.
It is recommended to pay attention to the verification progress of domestic manufacturers in 224G speed products.
**High-Speed Backplane Connectors:** Server architecture upgrades drive demand enhancement, and domestic manufacturers accelerate self-developed replacements.
High-speed backplane connectors are key components for achieving high-speed connections between system modules.
High-speed backplane connectors are used to connect single boards and backplanes, transmitting high-speed differential signals or single-ended signals, as well as current, and are key components for achieving high-speed connections between system modules.
Downstream applications include large communication equipment, ultra-high-performance servers and supercomputers, industrial computers, high-end storage devices, etc.
The performance of high-speed backplane connectors is developing towards high-speed, miniaturization, and low loss.
With the continuous increase in signal transmission rates and the high-density of connector pins, to reduce the loss in signal transmission, high-speed backplane connectors are developing in the direction of orthogonal architecture, cable backplane architecture, etc.
In terms of structure, high-speed backplane connectors include two parts: the plug and the socket.
The socket consists of a base, shielding parts, and signal pins, while the plug consists of a base, wafer (signal chip), and a fixed bracket.
The wafer is divided into two forms, wafer A and wafer B, with similar structures but staggered from each other.
The design of the wafer directly affects the signal integrity performance of the high-speed backplane connector, which is composed of four parts: terminals, conductive adhesive, metal shielding layer, and plastic layer.
**Demand Side:** The global market size for high-speed backplane connectors is expected to be around 42.8 billion yuan in 2025.
As bus communication technology upgrades, high-speed backplane connectors continue to iterate.
The value of high-speed backplane connector products increases rapidly with the upgrade of communication technology.
With the continuous increase in signal transmission rates, the density of contacts in the connector increases rapidly, and the physical distance between signals is greatly reduced.
The crosstalk caused by mutual coupling becomes more serious, and each high-speed backplane connector processes it with its own technology.
**Single Machine Value:** The single machine value of high-speed backplane connectors in NVIDIA NVL72 is about 230,000 yuan.
We estimate that the single machine value of high-speed backplane connectors in the new NVL72 architecture is about 230,000 yuan.
Unlike the SXM architecture where NVLink is routed through PCB traces, and in the DGX GH200 where each GPU uses NVLink copper cables connected to only three ports, NVIDIA's NVL72 architecture based on the GB200 has Compute trays and Switch trays connected by rear copper cable backplanes.
Each GPU requires 18 ports to connect with other GPUs, with a total of 1,296 ports needed in the NVL72 GPU, corresponding to 2,592 high-speed backplane connectors.
At a price of 180 yuan per pair of 224G high-speed backplane connectors, the single machine value is 230,000 yuan.
**Market Size:** The global server high-speed backplane connector market size is expected to be around 42.8 billion yuan in 2025.
We calculate the number of high-speed backplane connectors used per computing card as 6 pairs, with general servers referring to a configuration of 4 computing cards, corresponding to 24 pairs of high-speed backplane connectors; AI training servers are configured with 12 computing cards, corresponding to 72 pairs of high-speed backplane connectors; AI inference servers are configured with 10 computing cards, corresponding to 60 pairs of high-speed backplane connectors.
Referring to the official website of Mouser for the price of high-speed backplane connectors, we estimate that the global market size for high-speed backplane connectors was about 22.7 billion yuan in 2023, and it is expected to be about 42.8 billion yuan in 2025, with a CAGR of 37% from 2023 to 2025.
The main increase comes from the demand for high-speed backplane connectors driven by the growth in NVL72 shipments.
**Supply Side:** As overseas patent barriers weaken, the domestic replacement process for 112Gbps and above accelerates.
Overseas suppliers occupy the main market share in high-speed connectors, and there is a broad space for domestic replacement.
According to IECC, in 2020, overseas manufacturers such as Amphenol, Molex, TE Connectivity, and Shennan occupied the main share in the 25Gbps and 56Gbps high-speed connector market.
We believe that this is mainly due to the obvious advantages of overseas suppliers in four aspects: precision manufacturing capabilities, patent technology, testing and verification systems, and customer resources.
Under the weakening of patent barriers and the strengthening of domestic replacement demand, domestic manufacturers import precision manufacturing equipment and increase research and development to achieve accelerated domestic replacement.
In 2023, domestic high-speed backplane connector suppliers have all achieved mass production of 56Gbps high-speed backplane connectors and have achieved domestic replacement in Huawei and ZTE's high-speed backplane connector products with rates of 56Gbps and below.
In addition, in terms of high-performance products at 112Gbps and 224Gbps, the gap between the launch times of domestic and overseas manufacturers is getting smaller and smaller.
We are optimistic that domestic manufacturers will break through the competitive advantages of overseas suppliers in four aspects: precision manufacturing capabilities, patent technology, testing and verification systems, and customer resources, to achieve accelerated domestic replacement.
Domestic manufacturers continue to invest in research and development, and work with downstream customers to accelerate domestic replacement.
Domestic manufacturers continue to invest heavily in research and development, import high-precision manufacturing equipment from Europe and Japan, and improve the automation rate of production lines to enhance precision manufacturing capabilities and product performance.
In addition, downstream customers actively promote the verification of domestic supplier products under the demand for domestic replacement, and the process of domestic replacement is significantly accelerated.
**High-Speed I/O Connectors:** The increase in communication bus rates drives price increases, and domestic manufacturers enter the overseas supply chain through OEM.
High-speed I/O connectors are high-speed connectors used in conjunction with optical modules.
The interface technology standards and communication protocols of high-speed I/O connectors are consistent with optical modules and will be upgraded synchronously with optical module upgrades.
In terms of structure, the high-speed I/O connector system mainly includes the shell (cage), high-speed I/O connectors, and heat dissipation components, etc.
Looking at the signal transmission path, it mainly includes optical modules, EMI cages, and plug-in type PT connectors.
According to the specific requirements of signal transmission, some subsystems can be added, such as heat dissipation components.
**Demand Side:** The global market size for high-speed I/O connectors is expected to be around 20 billion yuan in 2025.
High-speed I/O connectors benefit from the increase in communication bus rates and the upgrade of plug-in optical modules.
The global market size for high-speed I/O connectors is expected to be around 20 billion yuan in 2025.
By calculating the unit price and quantity of high-speed I/O connectors of different rates, we estimate that the global market size for high-speed I/O connectors (including cages) will reach 20 billion yuan in 2025, with a CAGR of about 90% from 2023 to 2025.Supply Side: Overseas manufacturers dominate the high-end market, while domestic manufacturers are gradually replacing overseas suppliers to occupy the main market share, with domestic manufacturers gradually replacing overseas suppliers.
Currently, overseas suppliers such as TE Connectivity, Amphenol, and Molex still hold the main market share, and their single-channel 56Gbps high-speed I/O connector products are already mature, with 112Gbps products widely used by overseas leading products.
In addition, overseas suppliers such as TE Connectivity, Amphenol, and Molex have all launched 224G connection solutions.
The share of domestic participating manufacturers is still relatively low, mainly including two types: 1) Independent research and development of mainstream high-speed I/O connectors such as 28G and 56G.
2) The company's direct customers are well-known connector module manufacturers such as Amphenol and Molex, and they enter the domestic and foreign main supply chain through the OEM model.
High-speed copper cables: With the advantages of power consumption and cost, the usage increases, and domestic manufacturers accelerate the verification of high-speed products.
Taking the NVL72/NVL36*2 architecture as an example, the server internal cables mainly include three parts: machine internal cables (used between various components on the server tray), cabinet internal cables (used between server trays), and external cables (used for networking connections between servers).
Among them, we have analyzed the machine internal cables and cabinet internal cables in the report "Smart Computing Future Series Eleven: The Bridge of High-Speed Connection, AI Server Connectors and Cables Welcome Upgrade", and the following will focus on a detailed analysis of the external cables.
DAC & AEC & AOC: High-speed cables applicable to different application scenarios are divided into passive copper cables (DAC, Direct Attach Cable) and active copper cables (Active Copper Cable) according to whether they have built-in electronic components to enhance signals.
► Passive copper cable DAC: It does not require an external power supply, does not have built-in electronic components to enhance signals, and only forms a twisted pair cable by twisting two wires together.
In the high-speed cable solution, it has the advantages of the lowest delay and insertion loss, and the lowest cost.
However, it is also because the passive cable transmission only depends on the copper wire medium, and cannot amplify the signal to improve the signal quality under long-distance signal transmission, its transmission distance is limited, mainly used for short-distance transmission within the cabinet.
► Active copper cable ACC: The signal enhancement integrated circuit is integrated at the end of the cable, which makes the signal transmission over a longer distance without significant attenuation and improves the signal quality.
Among them, the active cable (AEC, Active Electrical Cable) is a subcategory of active copper cables, and AEC is mainly used in server-TOR and leaf-spine router racks.
Optical cables (AOC, Active Optical Cable) are integrated with optical modules at both ends and optical fibers in the middle, mainly used for connections between cabinets.
High-speed signals are transmitted through optical fibers, and both the transmission rate and transmission distance supported are better than copper cables, but the disadvantages are high power consumption and high cost.
In terms of specific application scenarios, the interconnection length between Spine-Leaf and Leaf-TOR is generally within 2Km, accounting for 1/3 of the total number of physical links in the entire cluster, mainly using AOC connections; the interconnection length between TOR and server network cards is generally within 10m, accounting for 2/3 of the total number of physical links in the entire cluster, mainly using AEC or DAC connections.
In addition, inside the server, such as in the NVL architecture, the Compute tray and Switch tray are connected by DAC.
Demand Side: With the advantages of power consumption and cost, the application of copper cables increases.
We predict that the AEC market size will grow the fastest from 2023 to 2028.
The energy consumption and cost of data centers are high, and the advantages of copper cables for short-distance transmission are obvious.
The energy consumption of a single cabinet in the data center is growing exponentially, and the low power consumption advantage of copper cable connections is obvious.
According to Huawei's official website, with the improvement of computing power and communication bandwidth, the power density of a single cabinet in the data center doubles every five years, and the single-port rate doubles with the rate generation, resulting in an exponential increase in the energy consumption of the data center.
Compared with AOC, DAC and AEC and other copper cables have lower power consumption, among which DAC power consumption is less than 0.1W, AEC power consumption is less than 5W, compared with the power consumption of AOC is less than 100W, which can to some extent alleviate the increase in power consumption of a single server cabinet.
According to NVIDIA's GTC2024 conference, the cost of NVL72 using copper cable interconnection is lower than that of optical modules and other optical fiber connection methods.
When the transmission distance is short, DAC is usually used; when the transmission distance reaches about 7m, AEC is needed to provide this kind of solution between DAC and AOC.
The AEC solution has a high cost performance, and it is expected that the market size will grow the fastest from 2023 to 2028.
With the improvement of communication rate, the signal transmission coverage distance of DAC decreases, and AEC improves the signal quality through the integration of Retimer DSP to achieve high-speed data transmission within 7m between servers.
With the upgrade of SerDes technology and the increase in communication bus transmission rate, the coverage distance of DAC has been shortened from 5m to 3m and even shorter.
AEC can achieve signal transmission distances of 400G-7m and 800G-2.5m between servers by configuring Retimer DSP chips at both ends to adjust the signal, eliminate noise, and amplify the signal.
AEC has advantages in volume and power consumption, reducing the difficulty of server heat dissipation.
AEC has built-in signal enhancement integrated circuits, so it can better achieve the thinning of core wires and the miniaturization of wire diameters compared to DAC.
According to Credo's official website, the volume of AEC is reduced by 75% compared to DAC.
Compared with AOC, AEC has advantages in power consumption and cost.
According to Credo's official website, the power consumption of AEC is reduced by 50% compared to optical cables, and the cost of AEC is about 1/3 of the cost of optical cables.
According to LightCounting data, from 2023 to 2028, the market size CAGR of DAC/AEC/AOC in server interconnection [1] cables is 25%/45%/9%.
According to LightCounting data, the market size share of DAC/AEC/AOC will change from 30%/6%/64% in 2023 to 40%/16%/44% in 2028.
Supply Side: The process and required equipment are complex, and domestic manufacturers continue to catch up with 224G products.
The process of making copper cables is complex, and the industry chain manufacturers mainly include core wire suppliers, finished cable suppliers, and cable assembly suppliers.
Risk Warning: The growth rate of capital expenditure by the Internet/carrier is not as expected.
If the growth rate of capital expenditure is not as expected, it will affect the demand for upstream supporting hardware such as server connectors in the industry chain.
AI industry demand is not as expected.
If the landing of AI large models or applications is not as expected, or the path to commercialization is blocked, it may affect the investment strength and determination of AI industry participants represented by leading cloud manufacturers in AI-related infrastructure, which may have an adverse effect on the market growth rate and product iteration speed of upstream AI hardware equipment.
The competitiveness of domestic suppliers is not as expected.
If domestic suppliers cannot be recognized by downstream customers in product performance and mass production capacity, their competitiveness may not be as expected.