Summary
The data center IT market surpassed $240 billion in 2022, with IT infrastructure equipment such as servers and storage systems as the primary spending driver. While servers are becoming more commoditized, we have seen more differentiation with semiconductors and components, such as central processing units (CPUs), accelerators, memory, storage drives, and network interface cards (NICs), that make up the server and storage system bill of materials. Furthermore, given the increased emphasis recently to employ more effective supply chain strategies, there has been an increasing emphasis for organizations to understand the supply and demand of semiconductors and components relative to system deployments. We project revenue for these key server and storage system components to grow at a 18% compound annual growth rate over the next five years to over $200 billion.
In this report, we will provide our assessment of the sell-through of data center semiconductors and components from major suppliers, and how those shipments relate to the deployment of IT equipment such as servers and storage systems by hyperscale cloud service providers and other data center customers.
With this report, you will be able to answer critical business questions including:
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How are data center semiconductors and components tracking with system deployments by data center customers?
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Are component inventory levels and pricing rising or falling?
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What is the demand outlook for semiconductors and components for the cloud hyperscalers and other data center customers?
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What is the component mix of servers and storage systems, and how that is changing over time?
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How is the CPU vendor landscape shifting among the major Cloud SPs (SPs) and the overall market?
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What impact does new server CPU platform refreshes have on system cost and component mix?
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What is the adoption rate of new technologies such as accelerators and Smart NICs and their impact to future data center spending?
The CPU vendor landscape has seen key developments in the last several years. While Intel remains the front-runner in the x86 server market, AMD has been gaining momentum. In addition, x86 alternatives such as those based on the ARM architecture have been gaining traction, with Amazon deploying their own ARM based processor, the Graviton, in their data centers, and new entrants such as Ampere Computing securing strategic customers. We will also examine how CPU refresh cycles have influenced server spending and architectures.
AI applications have seen tremendous growth over the last several years, with specialized processors such as accelerators intended to process AI workloads more efficiently than general purpose CPUs. In addition to NVIDIA as the clear market leader in this space with their GPU-based solutions, other major semiconductor manufacturers and start-ups have launched compelling solutions. In addition, many of the major Cloud service providers have produced their own custom accelerators that are deployed in their own data centers for selective applications.
Dell’Oro Group has been covering the Ethernet Adapter and Smart NIC market for the past four years, will be included in this report as part of the server bill of material set.
Furthermore, to provide a more comprehensive understanding of the server and storage system bill-of-materials, we will also report on the shipment of other vital components, such as memory and storage.
Quarterly Report Details
Dell’Oro Group’s Data Center IT Semiconductors and Components quarterly report tracks revenue, unit and capacity shipments and unit and capacity pricing, along with market share of major semiconductor and component manufacturers that supplies into the data center server and storage system markets starting from 2018. Technology of focus will be major server semiconductors and components such as:
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Central Processing Units (CPUs)
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Accelerators such as Graphics Processing Units (GPUs), Field Programmable Gate Arrays (FPGAs), and custom processors
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Memory (DRAM)
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Ethernet and InfiniBand Network Interface Cards (NICs) and Smart NICs
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Hard disk drives (HDDs)
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Solid state drives (SSDs) and NAND
In addition, we will provide our assessment of the demand for these components based on shipments of servers and storage system to the Top 7 Cloud service providers and to the rest-of-the-market from the original equipment manufacturers (OEMs). In the current report, we breakout our estimates of CPU shipments by vendor and platform type for the following Top 7 Cloud SPs:
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Alibaba
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Amazon
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Baidu
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Google
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Meta
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Microsoft
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Tencent
The quarterly report also includes a one-year outlook by technology area.
5 Year Forecast Report Details
In January and July, Dell’Oro Group publishes the Data Center IT Semiconductors and Components 5-year forecast reports offering a complete overview of the market with historical data from 2018 to the present. The forecasts provide a comprehensive overview of market and technology trends and include tables covering the same technology areas as the quarterly report:
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Central Processing Units (CPUs)
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Accelerators such as Graphics Processing Units (GPUs), Field Programmable Gate Arrays (FPGAs), and custom processors
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Memory (DRAM)
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Ethernet and InfiniBand Network Interface Cards (NICs) and Smart NICs
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Hard disk drives (HDDs)
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Solid state drives (SSDs) and NAND
We provide our long-term forecast of key metrics such as revenue, unit and capacity shipments, and price per unit or capacity, for the associated technology areas. In addition, we provide our assessment of the adoption of new technologies that could be disruptive to server and storage system architectures and ecosystem.
