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The data center chip market size is forecast to increase by USD 1.98 billion at a CAGR of 2.42% between 2023 and 2028. The market is experiencing significant growth due to several key trends and factors. Advancements in chip technology, such as the integration of artificial intelligence (AI) and machine learning capabilities, are driving demand for more powerful and efficient chips. Additionally, the increasing adoption of the Internet of Things (IoT) and big data-ready infrastructure is leading to a rise in data center construction and expansion. However, the market also faces challenges, including the growing threat of cybersecurity breaches and the need for greater energy efficiency. As data centers continue to process and store vast amounts of sensitive information, securing them against cyberattacks is becoming a top priority. Furthermore, the high energy consumption of data centers is a major concern, and there is a growing push for more sustainable and energy-efficient solutions. Overall, the market is poised for strong growth as it enables the digital transformation of businesses and industries.
The global market is experiencing significant growth due to the increasing adoption of cloud computing by major tech companies and the integration of chip technology in smart computing devices. The market is driven by the geographical expansion of these tech giants and collaborations with industry verticals such as manufacturing, IT & telecom, and finance. The market is witnessing a rise in demand for advanced chip solutions to support web applications, databases, big data analytics, and machine learning algorithms. Field-Programmable Gate Array (FPGA) technology is gaining popularity due to its flexibility and ability to handle complex computational tasks.
Chip technology is also crucial for powering cloud-based services. The market is expected to grow further as cloud computing continues to penetrate various industry verticals, leading to increased demand for efficient and powerful data center chips. The integration of chip technology in various applications, including web applications, databases, and big data analytics, is also fueling market growth.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD million" for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The GPUs segment is estimated to witness significant growth during the forecast period. The market is witnessing significant growth due to the increasing adoption of cloud computing and smart computing devices in various industry verticals such as manufacturing, IT & telecom, transportation, energy & utilities, and cloud services. Key players in this market are focusing on innovative chip designs for enhanced performance and compatibility among others. Government initiatives, like those in India by Inflection AI and Tele India Datacenter, are promoting the establishment of large-size data centers. KDDI and Acer are also expanding their geographical presence to cater to the growing demand for data center infrastructure.
Amazon's introduction of energy-efficient chips like Graviton4 is a significant development in the market, addressing global environmental concerns and offering a competitive advantage. Collaborations between industry leaders are also driving the market's growth. The market is segmented based on chip type, data center size, industry verticals, and data center operations. Web applications, databases, big data analytics, and machine learning algorithms are the primary applications of data center chips. Energy efficiency and sustainability are crucial factors influencing the market's growth, with power consumption being a major concern.
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The GPUs segment was valued atfor USD 4.54 billion in 2018 and showed a gradual increase during the forecast period.
APAC is estimated to contribute 69% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The market is witnessing significant growth due to the increasing adoption of advanced technologies in hyperscale data centers operated by industry leaders. The market is driven by the need for high-performance processing chips that support parallelism, low-precision arithmetic, and AI processors for data analytics, deep learning, and neural network-based applications. The accelerated depreciation of these advanced chips is also encouraging data center owners to invest in new technologies. FPGAs and GPUs are currently leading the segment, but the emergence of custom-built ASICs and other accelerators is expected to disrupt the market dynamics. The large-size segment is expected to dominate due to the growing demand for handling massive amounts of data in real time. However, the challenge of managing e-waste and ensuring sustainable practices remains a concern for market participants.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The advancements in chip technology is the key driver of the market. The market is witnessing significant growth due to the increasing adoption of cloud computing and the demand for smart computing devices. Next-generation chips, such as Application-Specific Integrated Circuits (ASICs) and Field-Programmable Gate Arrays (FPGAs), are playing a crucial role in enhancing the performance of data centers and connected devices. For instance, Arm Ltd, a leading chip designer, has introduced a new version of instruction set architecture to cater to the needs of data centers and artificial intelligence applications. This advanced technology is expected to provide a competitive advantage by offering improved performance, energy efficiency, and compatibility with various industry verticals, including manufacturing, IT & telecom, transportation, energy & utilities, and cloud services.
Government initiatives, such as those by the Government of India, are also driving the growth of the market. Collaborations between companies are leading to the development of innovative chip designs. The focus on geographical expansion and sustainability is another key trend in the market. Large-size data centers are increasingly adopting energy-efficient chips to reduce power consumption and address global environmental concerns. The use of machine learning algorithms, big data analytics, and web applications in data center operations is also driving the demand for advanced chip technology.
AI, IoT, and big data-ready infrastructure is the upcoming trend in the market. The market is witnessing significant growth due to the increasing demand for advanced computing solutions to manage the heavy workloads of data-intensive applications, particularly in industries such as manufacturing, IT & telecom, transportation, energy & utilities, and cloud services. Government entities and data center service providers are investing in new data center infrastructure to support cloud computing, big data analytics, machine learning algorithms, and web applications. Manufacturers like Mastercard, McAfee, and Amazon are responding by designing innovative chip solutions to enhance data center operations.
Furthermore, the market caters to various chip types and data center sizes, with large-size data centers requiring high-performance and compatible chips to handle complex workloads. Collaborations between industry leaders, such as KDDI and Red Hat OpenShift, are also driving geographical expansion and the adoption of smart computing devices. Cloud services are increasingly using chip technology to improve data center infrastructure, reduce power consumption, and ensure compatibility with various industry verticals and databases. Overall, the market is expected to grow significantly in the coming years, driven by the need for advanced computing solutions to manage large volumes of data and complex workloads.
Cybersecurity issues is a key challenge affecting the market growth. The market is experiencing significant growth due to the increasing adoption of cloud computing and smart computing devices. Government entities, such as Inflection AI in India, and leading organizations are investing in advanced chip technology to enhance data center operations and ensure data security. Key players are also leveraging large-scale data centers for web applications, databases, big data analytics, and machine learning algorithms. Geographical expansion and collaborations are key trends in the market, with industry verticals such as manufacturing, IT & telecom, transportation, energy & utilities, and cloud services adopting data center infrastructure.
Furthermore, chip types and data center sizes vary, with a focus on energy efficiency, sustainability, and power consumption due to global environmental concerns. Innovative chip designs offer competitive advantages in terms of performance and compatibility. Key players are focusing on energy efficiency and sustainability to gain a foothold in the market. Performance and compatibility are critical factors in the selection of chips for data center infrastructure. The growing importance of data security and the threat of cyberattacks are driving the demand for advanced chip technology in data center operations.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Achronix Semiconductor Corp. - The company offers data center chips such as Speedster7t FPGA, Speedcore embedded FPGA, and VectorPath S7tVG6 accelerator card.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is experiencing significant growth due to the increasing adoption of cloud computing and the expansion of data center operations. Government initiatives, such as those by the Government of India, promoting digital transformation and data center development, are driving market growth. Chip technology plays a crucial role in data center infrastructure, with smart computing devices and innovative chip designs offering improved performance and energy efficiency. Key industry verticals, including IT & telecom, manufacturing, transportation, energy & utilities, and cloud services, are investing in large-size data centers to support web applications, databases, big data analytics, and machine learning algorithms.
Furthermore, collaborations between companies are contributing to market growth through geographical expansion and advanced chip technology. Major data center operators are investing in energy-efficient chip designs, like the Graviton4, to address global environmental concerns and gain a competitive advantage. Power consumption and sustainability are key considerations in the market, with companies focusing on chip type and data center size to optimize performance and reduce power consumption.
Market Scope |
|
Report Coverage |
Details |
Page number |
181 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 2.42% |
Market growth 2024-2028 |
USD 1.98 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
2.34 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
APAC at 69% |
Key countries |
US, China, UK, Germany, and Taiwan |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Achronix Semiconductor Corp., Advanced Micro Devices Inc., Alphabet Inc., Arm Ltd., Broadcom Inc., Fujitsu Ltd., GlobalFoundaries Inc., Graphcore Ltd., Gyrfalcon Technology Inc., Huawei Technologies Co. Ltd., Intel Corp., Lattice Semiconductor Corp., Marvell Technology Inc., Microchip Technology Inc., Micron Technology Inc., NVIDIA Corp., Qualcomm Inc., SambaNova Systems Inc., Samsung Electronics Co. Ltd., and Taiwan Semiconductor Manufacturing Co. Ltd. |
Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Product
7 Market Segmentation by Business Segment
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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