Server Computing: A Data-Intensive Market Propelled by AI

Article By : Yole Développement

Yole expects the server computing market to reach US$33b in 2025. AI and HPC dedicated products combined will reach 29M units and US$8B in 2025...

Yole Développement (Yole) expects the server computing market to reach US$33 billion in 2025. AI and HPC dedicated products combined will reach 29Munits and US$8 billion in 2025.

Configurable SoC dedicated to AI inference will be more used following AI’s hype. The CPU revenue will reach US$21 billion in 2025, driven by Standard Cloud servers and HPC. Yole expects a 11% CAGR 2019−2025 for the HPC segment.

Market and technology trends:

  • Social and media applications are growing strongly, more workload needs to be computed.
  • Enterprise digitalization enhances the demand for hardware for virtualization and cloud computing for enterprises.
  • 5G arrival will likely lead to a bunch of all new applications.
  • Limiting power consumption is critical to prevent an explosion in electricity consumption.

Some big tech players are designing their own chips. Intel, Nvidia, AMD, and Xilinx, the few logic leaders, still by far owned the largest part.

“Between new opportunities and requirements brought by 5G, high-end AI and HPC computing workloads, and growing pressure to limit and in fact reduce power consumption, the datacenter server computing market is facing many technical challenges.” asserts Adrien Sanchez, Technology & Market Analyst, Computing & Software division at Yole Développement (Yole).

Yole’s The Computing for Datacenter Servers 2021 report contributes to the understanding of the impact on computing chips which can be found in datacenter servers, of key markets, such as cloud computing, enterprise digitalization, social and media, AI training and AI inference. This report provides a scenario for computing in this dynamic market and presents an understanding of the impact of both high-level workloads, including AI and HPC, and massive volume tasks such as video streaming.

What are the economic and technological challenges of the computing for datacenter industry? What are the key drivers? Who are the suppliers to watch, and what innovative technologies are they working on? What are the impacts of technology transition in datacenter business such as 5G or rising constraints such as power consumption? Yole presents its vision of the computing for datacenter servers industry.

Between performance and power consumption, specialization of chips is ongoing

As analyzed by Yole’s team in this report, from one side the share of specialized chips such as GPU, PLP and accelerators is increasing, and from another side more and more units are integrated into a single chip to address more workloads. Artificial Intelligence algorithms are driving both of these trends, with dedicated accelerators but also and dedicated units integrated into each type of chip.

Dedicating the computing to a specific type of algorithm through faster and more energy-efficient chips is a central trend, which is leading either to the use of dedicated chips such as FPGAs and accelerators or to the integration of specialized units into other chips. This market is studied from 3 perspectives in this report.

YDR20178 - Computing for datacenter servers 2021 - 2021 computing market for datacenter servers : three perspectives of server chips

Both large volume and high-end applications are boosting the IC server market

On the one hand, the IC datacenter server market has been boosted by large-volume demand with the digitalization of companies, an existing trend which was boosted even more by COVID-19, as well as by consumer applications, such as social networks and media applications.

According to Adrien Sanchez from Yole: “These two data-intensive applications rely heavily on video streaming which requires intensive computing capabilities, while they also put pressure on bandwidth. This is leading progressively to a new network organization which is less centralized and closer to the edge”.

On the other hand, high-end applications using HPC and the spread of AI in every vertical are requiring more and more capabilities.

YDR20178 - Computing for datacenter servers 2021 - From storage to High Performance Computing: application trends segmentation

And today most of the AI training and a still important portion of AI inferences are done in large datacenters. Yole’s analysts expect the associated revenues will grow with a CAGR of more than 10% in the coming years, reaching a total of US$33 billion in 2025.

YDR20178 - Computing for datacenter servers 2021 - 2019-2025 revenue of logic for datacenter

A few big giants are fighting for a stake worth billions in a technologically and strategically growing market

There is fierce competition between a few IC giants in this field. They are becoming less and less specialized in only one type of chip, and are rather developing comprehensive solutions for the server market, addressing all the main types of functions. The strategy of the biggest players is no longer to sell discrete chips, but to provide customers with entire platforms dedicated to their needs. These comprehensive solutions are being built through many acquisitions, including multi-billion-dollar acquisitions between major players, such as the acquisition of ARM by Nvidia ($40B, September 2020) and the acquisition of Xilinx by AMD ($35B, October 2020). The M&A strategies of Intel, Nvidia, and AMD are discussed in detail in the report, including a recap of their acquisitions during the period 2015-2020. The datacenter is not only a key market for big companies, but it is also a question of sovereignty for countries, which is leading to strategic geopolitical perspectives.YDR20178 - Computing for datacenter servers 2021 - Main AMD and Xilinx acquisitions

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