The Service Provider (SP) Router and Switch market is projected to grow at a 2 percent  CAGR from 2022 to 2027 to $77 billion by 2027, according to Dell’Oro Group.
Cisco, Huawei, Nokia and Juniper Networks are the leaders in the Service Provider (SP) Router and Switch market.

The growth in the worldwide SP Router and Switch market will be driven by the adoption of 400 Gbps technology-based products. Telecommunication and Cloud SPs will be investing in network upgrades to accommodate increasing traffic levels and to benefit from the economic efficiency of 400 Gbps technology.

400 Gbps-capable routers built on the newest generation of high-capacity ASICs offer the benefits of higher speeds per port with decreased energy consumption, thus reducing the total number of ports required and, in turn, the size of the chassis.

The higher-speed per port also lowers the cost per bit per port. Combined with the reduced energy consumption and the smaller, rack space-saving format of the router, transitioning to 400 Gbps ports enables SPs to make more economically efficient investments and lower operating costs.

In the SP Core Router segment, revenue will increase at a 4 percent CAGR from 2022 to 2027 and growth to be largely driven by the adoption of 400 Gbps technology.

The combined SP Edge Router and SP Aggregation Switch segment is expected to grow at a 1 percent CAGR, approaching $12 billion in 2027. The growth driver in the segment will be the expansion of mobile backhaul networks to support the adoption of 5G radio access networks (RAN), followed by increasing residential broadband deployments.

The IP mobile backhaul market in China will decline, with SPs shifting their investments to Core and Metro networks, and there will be an increasing demand for SP Core Router products as a result.