Data Center Chip Market Analysis North America, APAC, Europe, South America, Middle East and Africa - US, China, Taiwan, UK, Germany - Size and Forecast 2023-2027

Data Center Chip Market Forecast 2023-2027

The global data center chip market is projected to reach a value of USD 18.19 billion in 2027 with a  CAGR of 3.54% between 2022 and 2027. The market refers to the industry that produces and sells microprocessors and other integrated chips for data center infrastructure. The market is driven by the increasing demand for high-performance computing and storage solutions in data centers. Major players in the data center market include Intel, AMD, NVIDIA, and Qualcomm. The market is expected to witness significant growth due to the rapid expansion of cloud computing and the adoption of artificial intelligence in data centers. Innovations in chip design, such as the development of specialized AI chips and increased focus on energy efficiency, are influencing the growth market.

Market Share Analysis

To learn more about this report, View Report Sample

The market is experiencing rapid growth driven by various factors. Firstly, there's a surge in the demand for smart computing devices across diverse industry verticals, leading to increased adoption of advanced data center chips. Moreover, geographical expansion initiatives by key players and collaborations between technology firms are further fueling market expansion. Additionally, advancements in chip technologies such as GPU, FPGA, and ASIC are enhancing data center capabilities, enabling efficient processing of web applications, databases, and big data analytics. Furthermore, the integration of AI and machine learning algorithms into data center chips is revolutionizing IT & telecom and retail sectors, driving the demand for high-performance computing solutions. As a result, the market is witnessing significant growth, propelled by the continuous evolution of data center infrastructure and the growing need for advanced computing capabilities across various industry domains.

Market Dynamics and Customer Landscape

The market is witnessing rapid growth, driven by the increasing demand for cloud computing services provided by major players like Microsoft Azure, Amazon Web Services (AWS), and Google Cloud. Companies like IBM, NVIDIA, and Oracle Corporation are innovating chip technology to meet the requirements of smart computing devices. With expansions and collaborations, the market is witnessing a surge in GPU, ASIC, FPGA, and CPU adoption, catering to various industry verticals including manufacturing, IT & telecom, and retail. The rising need for data processing in web applications, databases, big data analytics, AI, and machine learning algorithms further propels market growth.

Key Market Drivers

Advancements in chip technology are key factors driving the growth of the global market. The processing technology is dynamic in nature, and companies can upgrade to a dynamic environment. Next-generation chips such as ASICs and FPGAs will help improve the performance of connected devices and data centers. Such chips can efficiently respond to the changing demands of the data center, accelerate the performance of other applications, and improve the overall performance of the data center.

Arm Ltd has released a next-generation technology aimed at taking over data centers and artificial intelligence applications. The company has released a new version of the instruction set architecture. Similarly, in March 2021, Advanced Micro Devices Inc. launched a data center chip named Milan to compete with Intel in the market. Thus, advancements in chip technology are expected to drive the growth of the market during the forecast period.

Significant Market Trends

Increasing investments in AI startups is a primary trend shaping the market trends and analysis of the market. AI technology is in the development stage, and its implementation is rapidly increasing in many industries. Therefore, several companies are entering the AI chip market to take advantage of the growing demand for AI technology. According to Technavio, about 70%-75% of companies are expected to adopt some form of AI technology within the next 20 years. Over the past five years, several startups have entered the AI space.

Due to the huge potential of the AI chipset market, several startups have been receiving significant investments from venture capitalists and major chip manufacturers for the development of AI platforms and chipsets. For instance, in May 2021, a Shanghai-based startup, Innostar Semiconductors, raised USD 100 million funding in a pre-series A round of funding, which was led by Shanghai Lianhe Investment and joined by New Alliance as well as new investors Atlas Capital and KQ Capital. The company will use the funding for the development of storage and resistive RAM chips. Thus, increasing investments in AI startups are expected to fuel the growth of the market during the forecast period.

Major Market Challenges

Focus on data center consolidation is a major restraint to the market growth analysis of the market. Many companies are focused on reducing the size of their data center facilities. Infrastructure as a Service (IaaS) is a key concept where multiple companies use consolidated data centers. The strong adoption of IaaS has led to data center consolidation. The main reason for consolidating data centers is the need to reduce operating costs. Several software companies are adopting common cloud platforms, thereby reducing the need for separate data centers. The move to server virtualization can be seen in many prominent market players involved in data center services.

The increase in the adoption of data center virtualization leads to the consolidation of data centers and reduces the total number of data centers used by an organization. This hinders the sales of  chips and reduces the footprint of data centers worldwide. However, the consolidation of facilities requires expertise as well as time. It also involves high risks. This can become a major challenge for the growth of the market during the forecast period.

Market Segmentation

In the market, leading players like Microsoft Azure, Amazon Web Services (AWS), Google Cloud, and Oracle Corporation offer cutting-edge solutions to meet the evolving demands of the infrastructure. These companies prioritize geographical expansion to cater to a growing customer base worldwide. Their chips are designed to optimize performance and efficiency, leveraging technologies such as GPU (Graphics Processing Unit), ASIC (Application-Specific Integrated Circuit), and CPU (Central Processing Unit). With a focus on innovation, they integrate AI (Artificial Intelligence) capabilities to enhance data processing and analysis. Moreover, partnerships with industry leaders like Mastercard, McAfee, and Red Hat OpenShift further enhance the versatility and functionality of their data center chip solutions, ensuring robust performance and security across diverse applications and workloads.

By Product

The market segment's share growth by the GPUs segment will be significant during the forecast period. GPUs handle graphics efficiently and offload some of the workloads of CPUs, to increase the efficiency of computing. They are the primary processing units in AI systems and are used in both training and inference processes. The data-intensive, multicore characteristics of GPUs in machine learning require a high memory bandwidth to feed the processing cores with data.

Get a glance at the market contribution of various segments View Free  PDF Sample

The GPUs segment was valued at USD 4.53 billion in 2017 and continued to grow until 2021. Vendors are investing in developing powerful GPUs with machine-learning capabilities.  For instance, in April 2021, NVIDIA introduced a new class of NVIDIA-Certified Systems, which brings AI to organizations that run their applications on industry-standard enterprise data center infrastructure. The company announced the expansion of the NVIDIA-Certified servers ecosystem, which will provide new opportunities for systems that feature the NVIDIA A30 GPU for AI and data analytics and the NVIDIA A10 GPU for AI-enabled graphics, virtual workstations, and mixed computing. These factors will drive the growth of the segment during the forecast period.

Regional Analysis Market by Geography

For more insights on the market share of various regions Download PDF Sample now!

APAC is estimated to contribute 50% to the growth of the global market during the forecast period. Technavio’s presents market growth and forecasting of reports have elaborately explained the regional trends and drivers that shape the market during the forecast period.

The demand will increase in North America owing to higher investments by hyperscale cloud providers, colocation service providers, and enterprises, which are upgrading their IT infrastructure to support edge computing, 5G, multi-cloud services, big data analytics, and the IoT. The US is the hub in North America. The country has witnessed substantial investments in the field of cloud computing, and the adoption of data centers has increased in the past few years. The market in Canada is also registering growth owing to the rising demand from colocation providers and cloud service providers. These factors will drive the growth of the market in North America during the forecast period. 

Customer Landscape

The market research and growth 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 growth strategies.

 Market Customer Landscape

Key Market Players

Companies are implementing various market analyses and report a variety of strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Huawei- The company offers folding cartons such as standard folding boxes, hybrid packaging cartons, enhanced packaging cartons, and multipack cartons.

Latticesemi- The company offers folding cartons such as custom medical boxes, custom food boxes, custom retail boxes, and custom beverage boxes.

Microchip- The company offers folding cartons such as custom-sized boxes with corrugated fanfold.

The research report provides the market growth and trends detailed analyses of the competitive landscape, developments and news  of the market and information about 15 market companies, including:

• Achronix Semiconductor Corp.
• Advanced Micro Devices Inc.
• Alphabet Inc.
• Arm limited
• Broadcom Inc.
• Fujitsu Ltd.
• GlobalFoundaries US Inc.
• Graphcore Ltd.
• Gyrfalcon Technology Inc.
• Huawei Technologies Co. Ltd.
• Intel Corp.
• Lattice Semiconductor Corp.
• Marvell Technology Inc.
• Microsoft
• Microchip Technology Inc.
• Micron Technology Inc.
• NVIDIA Corp.
• Qualcomm Inc.
• SambaNova Systems Inc.
• Samsung Electronics Co. Ltd.
• Taiwan Semiconductor Manufacturing Co. Ltd.
• Arm Ltd.

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.

In the industry, major players like Intel Corporation and ARM Limited drive innovations in processors and networking technologies. The relentless developments in FPGA (Field-Programmable Gate Array) and cooling systems define the industry's evolution. However, restraints within the chip industry pose challenges. As the semiconductor sector burgeons, chipmakers play a pivotal role in shaping the market. The dynamic interplay of data centers and chipmakers, including BrainChip and Microchip, underscores the strategic importance of processors in the flourishing Data Center Business, marking a transformative era in this industry.

Market Analyst Overview

 

The market is witnessing robust growth, driven by the increasing adoption of cloud computing services offered by major players like Microsoft Azure, Amazon Web Services (AWS), Google Cloud, and IBM. Companies like Oracle Corporation, Mastercard, and McAfee are also contributing significantly to the market expansion. Red Hat OpenShift is gaining traction for its open-source container platform. Smart computing devices are revolutionizing data center operations, while collaborations between industry leaders are fostering innovation. Advanced hardware components such as GPU (Graphics Processing Unit), ASIC (Application-Specific Integrated Circuit), and CPU (Central Processing Unit) are powering the infrastructure for various industry verticals. Web applications, databases, AI (Artificial Intelligence), machine learning algorithms, and IT & telecom sectors are driving demand worldwide.

The market is witnessing significant advancements, driven by key players such as GSMA Intelligence, Government of India, GitLab Inc., and Acer, among others. Innovations from companies like Inflection AI, KDDI, and Power Grid Corporation India Ltd are reshaping the landscape. Noteworthy developments include the emergence of Data center chip market trends, particularly with IBM z16 and Chip Type technologies. Large-size data centers are adopting solutions like Tele India Datacenter and Datasamudra to meet growing demands in sectors like Government, Transportation, and Energy & utilities. With a focus on sustainability, Graviton4 and other innovative chip designs are addressing power consumption concerns and aligning with global environmental standards. The market thrives on competitive advantage through compatibility, accelerated depreciation, and optimized processing chips for parallelism and AI accelerators, ensuring efficient data center operations while mitigating e-waste challenges.

Segment Overview

The industry report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. 

• Product Outlook 
  • GPUs
  • ASICs
  • CPUs
  • FPGAs
• Business Segment Outlook 
  • Small and medium
  • Large
• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • South America
    • Chile
    • Argentina
    • Brazil
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Industry  Scope
Report Coverage	Details
Page number	174
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 3.53%
Market growth 2023-2027	USD 2.9 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	2.3
Regional analysis	North America, APAC, Europe, South America, and Middle East and Africa
Performing market contribution	APAC at 50%
Key countries	US, China, Taiwan, UK, and Germany
Competitive landscape	Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks
Key companies profiled	Achronix Semiconductor Corp., Advanced Micro Devices Inc., Alphabet Inc., Broadcom Inc., Fujitsu Ltd., GlobalFoundaries US 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., Taiwan Semiconductor Manufacturing Co. Ltd., and Arm Ltd.
Market dynamics	Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for 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.

View PDF Sample

What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting between 2023 and 2027
• Precise estimation of the market size and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming trends and changes in consumer behaviour
• Market growth analysis across North America, APAC, Europe, South America, and Middle East and Africa
• Thorough analysis of the market’s competitive landscape and detailed information about companies
• Market forecasting of factors that will challenge the growth of market companies

We can help! Our analysts can customize this market research report to meet your requirements. 

Get in touch