Servers will account for nearly half of global data center capital expenditures by 2025

2021-08-15 00:10:00

The outbreak has led to strong demand for computing and digital technologies as businesses and consumers' behavior changes. Current semiconductor foundry capacity is not able to meet the recent surge in global demand. The cost of servers and other data center equipment is expected to rise sharply in the short term, in part because of a global semiconductor shortage. The rise in the average server sales price (ASP) is likely to be close to double-digit percentage levels in 2018, when it was also a period of oversupply. However, in the long term, we expect supply and demand dynamics to be balanced and technology transformation to drive market growth. Here are the technical trends we believe are influencing the five-year forecast:

  • CPU cycle: As processor competition heats up, both Intel and AMD have developed a positive roadmap to introduce new platform s. Intel Saphire Rapids and AMD EPYC Genoa, both expected to be available in 2022, will feature more processor cores and memory channels, as well as support for the latest interfaces such as CXL, DDR5, and PCIe Gen 5 for denser server form factors and new architectures.
  • Accelerated computing: A new type of accelerated server is emerging that is densely equipped with coprocessors that are optimized for application-specific workloads such as artificial intelligence and machine learning. Some cloud service providers, such as Amazon and Google, have deployed accelerated servers using in-house self-research AI chips, while others have generally deployed GPU- and FPGA-based solutions. According to our estimates, the attach rate for servers with accelerators will increase to 13% by 2025.
  • Edge computing: Some applications, such as cloud gaming, autonomous driving, and industrial automation, are sensitive to network latency and require MEC nodes to be laid out at the edge of the network, where the sensors are located. Unlike cloud computing, which is replacing enterprise data centers, edge computing s new market opportunities for new use cases.

With the evolution of CPU platforms and the adoption of accelerated computing, we expect data centers to be better optimized to handle application-specific workloads with fewer but more powerful and dense servers, increasing the total available market with higher server ASPs. Edge computing, on the other hand, will increase the available market through a new deployment of distributed edge location servers.

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