This will be a very short blog post because Dusan Tekeljak has already written a blog post about this topic. Nevertheless, I was not aware about such Intel NIC driver behavior which is pretty interesting, thus writing this blog post for broader awareness.
My customer who is modernizing their physical networking and implementing Cisco ACI, therefore moving from CDP (Cisco Discovery Protocol) to LLDP (Link Layer Discovery Protocol), which is industry standard. They have observed, that LLDP does not work on some NICs and after further troubleshooting, they realized it happens only on ESXi hosts with Intel X710 NIC. The NICs from other vendors (Broadcom, QLogic) worked as expected.
After some further research, they found following internet articles
and after opening this topic with server vendor (HPE), they got the following Customer Avisory
Long story short Intel NIC driver contains the "LLDP agent" which is by default enabled and consumes LLDP ethernet frames. By disabling LLDP agent within the Intel NIC driver, LLDP is not handled by NIC driver and can be observed within ESXi hypervisor, thus vSwitch network discovery via LLDP works as expected.
If you have four (4) port Intel NIC you must use following command to disable LLDP agent on all four NIC port.
On HPE server, this behavior can be controlled via BIOS. The feature for disabling the Link Layer Discovery Protocol (LLDP) in the BIOS/Platform Configuration (RBSU) has been included in the HPE Intel Online Firmware Upgrade released in 20 Dec 2019.