TrendForce Projects AI Networking and Interconnect Market to Reach $279.8 Billion by 2027
TrendForce recently published a forecast predicting that the AI networking and interconnect market will hit $279.8 billion by 2027, achieving a 95% compound annual growth rate from 2024. Switches, pluggable optical modules, and NICs or DPU hardware are projected to constitute 88% of this total market value. This explosive growth reflects the massive infrastructure investments required to support increasingly complex large-scale AI training and inference clusters. As AI models scale into hundreds of thousands of accelerators, robust interconnect architectures become critical bottlenecks and key revenue drivers for hardware vendors. Switches will account for the largest share at $105 billion in 2025, while pluggable optical modules and NIC/DPU revenues will reach $84.1 billion and $57.4 billion respectively by 2027. Furthermore, Scale-up interconnects for intra-chip AI communication are expected to grow rapidly, capturing 24% of the market alongside bandwidth upgrades to 1.6T for Scale-out networks.
## BACKGROUND
Scale-up refers to high-speed communication interconnects directly linking AI chips within a single node, whereas Scale-out connects servers across backend networks in large data centers. Pluggable optical modules and DPU devices help optimize data movement and lower power consumption or alleviate CPU workloads in intensive AI environments.