According to a new analysis from Dell’Oro Group, a market research company with expertise in the networks, data center, security, and telecommunications sectors, there is a notable change taking place in the world of server semiconductors and components. The market for server semiconductors and components saw an astounding 29% YoY increase in the third quarter of 2023, according to the study. This rise was mostly caused by the growing demand for accelerators, which are mostly used in AI applications.
This acceleration market boom is not just a fleeting trend. It is changing the face of server technology. According to Dell’Oro Group’s predictions, revenues from accelerators will surpass those from regular CPUs by almost double by 2023. This change in direction emphasizes how much more specialized hardware is needed to handle the processing needs of machine learning and artificial intelligence applications.
A more thorough explanation of this change is given by Baron Fung, Senior Research Director of Dell’Oro Group. According to him, the market for server and storage system components as a whole is expected to expand by 11% in 2023. The market for accelerators has a major positive impact on this expansion. On the other hand, a 27 percent revenue drop, excluding accelerators, is expected, associated with lower demand for general-purpose computing as a result of system suppliers’ and hyperscale cloud service providers’ inventory changes.
NVIDIA, Samsung, Intel, AMD
“As Baron Fung projects strong double-digit growth in accelerator revenue through 2024, the future looks bright,” said Baron Fung, Senior Research Director of Dell’Oro Group.As Baron Fung projects strong double-digit growth in accelerator revenue through 2024, the future looks bright. It is also anticipated that a thorough rebound would occur in a number of market areas, such as CPUs, memory, storage devices, and network interface cards (NICs). Vendors increasing stock levels in expectation of a spike in server demand will drive this recovery. It is anticipated that as demand for these components increases and as next-generation server platforms become more prevalent, prices will likewise rise in tandem with the growth in unit numbers for these components.
The research also provides insight into this sector’s trends and industry leadership. For the third quarter of 2023, NVIDIA leads the market in sales of server and storage system components thanks mainly to its GPU accelerators. Samsung and Intel are closely behind. There has been a noticeable move towards accelerated computing as accelerator sales have surpassed CPU revenues in growth.
The growing use of Smart NICs and higher-speed ports, especially in the field of accelerated computing, helped the NIC sector, which had seen a slight decrease in the first half of 2023, recover in the third quarter. In addition, it is anticipated that GPU revenue would increase by an astounding 70% by 2024. Even while NVIDIA is now the market leader, it might face increasing competition from AMD and Intel as well as from specialized accelerators made by hyperscale cloud service providers.
Reflecting the rising significance of artificial intelligence (AI) and specialized computing in molding the future of corporate and cloud computing infrastructure, this revolutionary era in the server semiconductor and component market would mark a turning point in the technology sector, according to Dell’Oro Group.
