Compared to the deceleration in the PC industry, the server industry is expected to see year-on-year shipment growth in 2022 and another increase in 2023 as consumer use of Internet services continues to expand , while digital transformation has become popular among enterprises due to the influences of the COVID-19 pandemic, which has led them to procure more servers.
Global server shipments are expected to grow 6.4% year-on-year to around 18 million units in 2022, according to figures from DIGITIMES Researchwho noted that US-based tier-one cloud data center operators – Google, Amazon, Meta and Microsoft – will be the main contributors to shipment growth as they continued to expand their data center infrastructure in the whole world.
Volumes are expected to grow a further 5% year-on-year to just over 19 million units in 2023 driven by improved supply of ICs and components, strong orders from the four main data center operators US-based cloud data and the release of new-generation server processors.
Shortages of ICs and components, which haunted server industry performance in 2021 and early 2022, are gradually easing in the second half of 2022 and are expected to have even less impact on the industry in 2023 .
Edge computing servers will be a key application that cloud data center operators and server brand vendors will focus on developing in the coming years due to the extensive deployment of enterprise hybrid cloud services, which will have a heavy use of Edge systems.
At the same time, the expansion of 5G data center infrastructure is expected to accelerate the development of main and edge telecommunications servers. Since the O-RAN Alliance is pushing hard to make off-the-shelf commercial systems act as state-of-the-art RAN-side equipment, the strategy is expected to accelerate shipments of white-box edge telecommunications servers. after 2023.
Intel’s next-generation Eagle Stream server platform and AMD’s fourth-generation EPYC server platform (codenamed Genoa) will officially enter volume production in the first half of 2023 and are expected to drive demand for replacement of companies and data center operators in 2023 and 2024.
Arm-based processors will begin to enter the server market, which has been dominated by x86-based processors, after 2023 with tier-one cloud computing data center operators, such as Amazon, and chip vendors Nvidia and Ampere actively working on the development of a new cloud. and HPC solutions with Arm-based processors.
Share of shipments by customer group
The combined share of global server shipments of the top four US-based cloud data center operators has continued to grow and is expected to reach 46% in 2022, from 43.1% in 2021. In 2023, the percentage will increase to 47.5% as growing consumer use of internet services will drive data center operators to establish more facilities to meet their demand.
US-based server brand vendors including Hewlett-Packard Enterprise (HPE) and Dell are expected to see their combined share decline from a year ago in 2022 as their server shipments will not see growth as robust as those of the 4 major cloud data center operators.
Since many businesses are likely to see their operations significantly compromised by the economic downturn, they should reduce capital expenditures for 2023 and reduce server purchases for the year to minimize the impact, thereby influencing server sales. server brand vendors, which would result in the combined share of server brands dropping below 30%.
Chinese server brands – Inspur, Lenovo and Huawei – mainly supply products to local businesses and data center operators. Although their server shipments are likely to be hampered by U.S. trade bans on CPUs and GPUs, Chinese government subsidies are expected to support enterprise and data center operator demand for servers. at top speed.
The combined share of Chinese server brands will remain at around 17-18% from 2021 to 2023. Although Chinese tier-one cloud data center operators including Alibaba, Tencent and Baidu are expected to slow their server orders in Due to the government’s cyber security management policy, their orders for the year are expected to remain at about the same level as in 2022.
The server industry was once dominated by Intel processors with a 90% market share, but AMD is slowly catching up with its EPYC platform, while Arm-based processors have also started to see a growing presence in the industry. .
In 2021, Intel’s processors only had a share of less than 85% in the global server market, with AMD holding over 11%. The share of Arm-based processors was 3.5%.
After AMD released the Milan-X in the first half of 2022, Microsoft fully upgraded its Azure cloud services servers from the previous generation Milan processors to the new processors, which partly benefited the processor share. AMD, allowing it to grow to more than 15% in 2022.
AMD completing the acquisition of FPGA developer Xilinx in the upper half of 2022 should also help the processor company expand into the edge server market for AI inference or long-term telecommunications applications.
The top four US-based cloud data center operators and China’s tier-one data center operators all adopted servers powered by AMD’s EPYC processors in 2022. Since their purchase of servers based on AMD is expected to continue to grow, the share of AMD-powered servers is expected to reach over 17% in 2023, while that of Intel processors will drop to less than 75% from around 77% in 2022.
Servers equipped with Arm-based processors will see their share climb slightly below 7% in 2022 and reach almost 8% in 2023 with the strong development of Amazon, Nvidia and Ampere.
ODM shipments from Taiwan
Server shipments by major ODMs in Taiwan are also on a growth trend from 2021 to 2023 and will increase from around 15 million units in 2021 to 16 million in 2022 and 17 million in 2023, with the combined global share remaining steadily greater than 90% over time.
Inventec will remain Taiwan’s largest manufacturer in 2022, not far behind second-place Foxconn Technology Group (Hon Hai Precision Industry) and third-place Quanta Computer. The three ODMs will achieve shipments of more than three million units during the year.
Both Inventec and Foxconn get orders from US-based server brand vendors and cloud data center operators, while Quanta primarily supplies servers to US-based cloud data center operators.
Wiwynn is expected to become the fourth largest manufacturer in 2022, followed by Wistron in fifth and Mitac in sixth. The three manufacturers will see shipments between 1 and 1.6 million units in the year.
Wiwynn primarily focuses on US-based cloud data center operators, while Wistron’s primary customers are US and China-based server brands and Mitac primarily ships to Inspur, based in China. China.
In 2023, ODMs that focus on US-based cloud data center operators are expected to see increased shipments, while those that ship to server brands are expected to see a deceleration.