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Broadcom's (AVGO) Ethernet Adapters Adopted by Baidu Cloud

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Broadcom AVGO recently announced that its Stingray Ethernet-based adapter, 100G SmartNIC, has been selected by Baidu’s BIDU cloud platform to boost server performance and utilization.

Notably, the chipmaker’s Stingray adapter utilizes eight ARM A72 CPU cores to provide high performance and accelerate complex cloud native workloads.

The adapter supports 3GHz, 300G of memory bandwidth with 100G NetXtreme Ethernet NIC, to deliver advanced network function virtualization capabilities.

Integration of Stingray SmartNIC’s programmability functionalities enables hyperscalers to power distributed security and networking applications.

Broadcom’s Ethernet adapters offer advanced capabilities required to accelerate various cloud native applications of Baidu’s Cloud Services and reduce total cost of ownership.

Management remains elated on growing clout of its SmartNIC adapters, which are aiding Baidu Cloud to accelerate dynamic workloads in a cost-effective manner in a secure infrastructure.

Broadcom Inc. Revenue (TTM)

Broadcom Inc. Revenue (TTM)

Broadcom Inc. revenue-ttm | Broadcom Inc. Quote

Ongoing momentum is anticipated to aid Broadcom in bolstering Semiconductor solutions’ revenues in the quarters ahead.

Smart NIC Demand Among Hyperscalers Bodes Well

The need to access and process data at a faster speed due to data growth in data centers is increasing demand for high-speed Ethernet adapters among hyperscale cloud service providers (“CSPs”).

Increasing bandwidth and growing capacity of data centers in this connected data-intensive era are other notable factors advancing the cause for Smart NIC adapters.

Per Dell’Oro Group report, SmartNIC market is anticipated to see a CAGR of 25% and account for 23% of Controller and Adapter market by 2024.

Notably, per IDC estimates, the global datasphere will grow to 175 zettabytes (that is a trillion gigabytes) by 2025, from 33 zettabytes in 2018. This exponential growth is expected to favor adoption of Broadcom’s SmartNIC solutions driven by growing demand for higher network speeds for fast processing of data.

Intensifying Competition a Woe

Broadcom is one of the major suppliers of SmartNIC Ethernet adapters in the market today.

In fact, per Dell’Oro Group’s fourth-quarter 2019 Controller and Adapter report, as quoted by Broadcom, the company had the highest market share in the Smart NIC space in 2019.

However, other Smart NIC Ethernet adapter vendors including Xilinx XLNX and Mellanox MLNX, are striving to gain share in this growth market, which is evident from recent developments.

On Mar 3, 2020, Xilinx unveiled SmartNIC platform Alveo U25 SmartNIC, which will deliver convergence of network, storage and compute acceleration functions on a single device. Acquisition of SolarFlare, is expected to aid the company in developing SmartNIC platforms based on FPGAs.

Meanwhile, Mellanox rolled out the ConnectX-6 Dx SmartNICs and BlueField-2 I/O Processing Units (IPUs), with advanced security acceleration engines, on Feb 24, 2020. The solutions enable data centers with high performance, efficiency and security capabilities to handle massive scale workloads and accelerate mission-critical applications.

Notably, Broadcom currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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