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2022/03/29
According to TrendForce research, corporate demand for digital transformation including artificial intelligence and high-performance computing has accelerated in recent years, which has led to increasing adoption of cloud computing In order to improve service flexibility, the world's major cloud service providers have gradually introduced ARM-based servers The penetration rate of ARM architecture in data center servers is expected to reach 22% by 2025
In the past few years, ARM architecture processors have matured in the fields of mobile terminals and Internet of Things but progress in the server field has been relatively slow However, companies have diversified cloud workloads in recent years and the market has begun to pay attention to the benefits ARM architecture processing can provide to data centers TrendForce believes that ARM-based processors have three major advantages First, they can support diverse and rapidly changing workloads and are more scalability and cost-effective Second, ARM-based processors provide higher customization for different niche markets with a more flexible ecosystem Third, physical footprint is relatively small which meets the needs of today's micro data centers
Influenced by geopolitics and the strengthening of data sovereignty in various countries, major cloud service providers and telecom operators are actively developing micro data centers which will further drive the penetration of ARM-based processors At the same time, from the perspective of cloud service providers currently adopting ARM-based processors, Graviton, led by AWS, has the largest market scale and began encroaching gradually into the market in 2021 TrendForce also observed that AWS's deployment of ARM-based processors in 2021 reached 15% of overall server deployment and will exceed 20% in 2022 This forces other major cloud service providers to keep up by initiating their own projects at various foundries If testing is successful, these projects are expected to start mass introduction in 2025
In addition, according to the Neoverse Platform plan previously released by ARM, its Platform Roadmap will also be one of the key drivers of penetration This product line is set up to target ultra-large-scale data centers and edge computing infrastructure However, it is worth mentioning, since x86 is still mainstream in the market and ARM-based server CPU suppliers only maintain small-batch production orders at this stage and primarily focus on ultra-large-scale data centers, introduction of ARM-based servers into enterprise data centers will be slow going Thus, TrendForce believes that it will still be difficult for ARM-based servers to compete with x86-based servers before 2025
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/12/21
The new normal ushered in by the pandemic will not only become the driving force of digital transformation but will also continue to drive the server market in 2022, according to TrendForce’s investigations It is worth noting that potential unmet demand in 2021 and the risk of future server component shortages will become medium and long-term variables that influence the market Analyzing the shipment volume of completed servers, a growth rate of approximately 4-5% in completed server shipments is expected next year with primary shipment dynamics remaining concentrated in North American data centers with an annual growth rate of approximately 13-14% From the supply chain perspective, the ODM Direct business model has gradually replaced the business model of the traditional server market, giving cloud service providers the ability to respond quickly to market changes However, based on the unpredictability of the market, TrendForce assumes two forecasts for server growth trends One, the supply situation of key components is effectively improved Two, the supply situation of key components is exacerbated
TrendForce states, based on the current situation as materials issues ease quarter by quarter, the annual growth rate of server shipments in 2022 will reach 4~5% There are three primary factors driving market momentum First, the introduction of the Intel Sapphire Rapids and AMD Genoa platforms into the market may once again stimulate the replacement of enterprise client servers and infrastructure construction in data centers Second, the market generally believes that transformational needs generated by the pandemic in 2022, such as shifts in working paradigms and the new normal, will continue to drive the cloud market Furthermore, international tensions have led to geopolitical uncertainty, which in turn has encouraged countries to tighten their control over data sovereignty and prompting the emergence of small-scale data centers in specific geographic locations
Actual shipment volume of completed servers in 2022 depends on improvement of supply chain issues
Based on the two aforementioned assumptions, if the pandemic is effectively controlled next year, and international logistics, satisfaction of materials demand, and other factors either return to normal or fare better than expected, server companies will be able to increase their shipping capabilities and the annual growth rate of shipments in the overall server market will be able to reach 5-6% while the annual growth rate of ODM-Direct will approach 15%, up from the original forecast 13% However, if the pandemic intensifies next year, the overall global economy will continue under that dark cloud which will greatly affect the willingness of companies to invest In that case, the estimated annual growth rate of server shipments will fall to only 3-4% In addition, the growth momentum of North American data centers will also be affected leading to an annual growth rate of ODM-Direct of only 10%, approximately
As a whole and continuing under the influence of the two-year pandemic, the business trend of flexible deployment is irreversible Regardless of overall economic changes, TrendForce expects double-digit growth in the demand for ODM-direct servers next year while overall server demand will also maintain a positive growth trajectory However, continued attention should be focused on issues related to server order fulfillment in the broader market, including the fulfillment rate of key PMIC and LAN chip materials At the same time, another major market variable will be whether Intel and AMD can introduce their two new platforms as scheduled next year and inject additional momentum into equipment replacement
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/10/13
Escalating trade tensions between the US and China, rising geopolitical issues, increased tariffs, and uncertainties stemming from the COVID-19 pandemic’s emergence last year have compelled server ODMs to actively shift their operations closer to clients as well as engage in risk mitigation strategies, according to TrendForce’s latest investigations Taiwanese ODMs, in particular, are shifting their production bases away from domestic China and accelerating the installation of additional overseas production lines TrendForce expects the share of servers manufactured in domestic China by global server ODMs to undergo a 7% YoY decrease this year as these ODMs shift their production bases mainly to Taiwan Furthermore, Taiwanese ODMs are expected to account for about 90% of total server production this year
On the other hand, server assembly operations, which are closely related to motherboard manufacturing operations, are also dynamically reserving their L6 capacities Server assembly facilities located in New Mexico and the Czech Republic are gradually installing new production lines for server motherboards there Inventec, Wistron (including Wiwynn), and Foxconn all currently possess sufficient motherboard manufacturing capacities for allocation as needed
While future changes in the overall server supply chain remains to be seen, it should be pointed out that the migration of production bases pertaining to US companies is of particular importance For instance, North American CSPs have requested their server ODM partners to migrate L6 assembly lines to locations such as Taiwan and Southeast Asia in response to potential geopolitical factors going forward However, servers to be shipped to non-US regions will still be manufactured in China in accordance with prior plans Aside from Google and Facebook, both of which have production lines in Taiwan, AWS and Microsoft have also transitioned their production lines to Taiwan
Regarding major server ODMs’ current progress, most of them have installed new production lines in Taiwan, with Inventec, Wistron, Quanta, and Foxconn making the most headway For instance, after installing three additional production lines in Guishan, Taoyuan at the end of 2020, Inventec currently operate a total of eight production lines, while Wistron has not only installed several spare production lines in the Southern Taiwan Science Park, but also planned to expand production bases in Southeast Asia at the end of 2021 for capacity allocation purposes Quanta is aiming to capitalize on demand from 5G-related applications and data center build-outs by continually adjusting its production capacity for motherboards in Taiwan and Thailand Finally, by expanding the physical capacity of its Taoyuan facility, Foxconn is able to avoid incurring tariffs for its North American clients’ L6 assembly operations
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/08/11
Suppliers and clients in the server DRAM market are still having difficulty in reaching agreements on prices for 3Q21 contracts even though the quarter is well underway, according to TrendForce’s latest investigations Hence, server DRAM contract prices are much more varied than before Regarding the price trend in July, contract quotes for the mainstream 32GB RDIMMs rose by 5-7% MoM However, the price hikes have led to a reduction in demand, and there are indications that server DRAM sales bits will register some decline for 3Q21 The release of server CPUs based on the new platforms is driving the procurement of higher-density 64GB RDIMMs, but this has not resulted in a significant corresponding increase in content per unit The general trend for buyers is to replace two 32GB modules with one 64GB module, rather than a one-to-one replacement as DRAM suppliers previously expected Contract prices of 64GB RDIMMs rose by 5-7% MoM for July, though prices were below this range for some transactions
TrendForce’s analysis shows that server DRAM suppliers and buyers are finding it difficult to reach a consensus on prices because DRAM suppliers expect that the demand for server DRAM modules is going to surge in 3Q21 as the third quarter is the traditional peak season for the server market As well, suppliers also anticipate that the adoption of new server processor platforms will increase the memory content in servers With a more optimistic demand outlook, suppliers have adjusted their product mixes to allocate more of their production capacity to server DRAM Hence, the supply fulfilment rate has risen significantly in the server DRAM market in 3Q21 Server DRAM buyers, on the other hand, already have a high level of inventory Clients in the data center segment were aggressively stockpiling during the first half of this year due to worries about the impact of the COVID-19 pandemic on the supply chain They now need some time to consume their inventories and are reluctant to procure more DRAM modules
Contract prices will be constrained to rise further in 4Q21 as demand side has turned conservative
Currently, enterprise server OEMs in North America have finished arranging their quarterly contracts, whereas numerous cloud service providers and Chinese enterprise server OEMs are still in the midst of negotiations TrendForce believes that, in order to reach their targets for sales and shipments, server DRAM suppliers may be willing to cut more “special deals” for server DRAM products in August Specifically, suppliers will push for lock-in contracts that offer adjustable prices for fixed quantity
On the whole, the general behaviors of DRAM buyers with regards to procurement have changed noticeably form the first half of this year As the demand related to servers, PCs, and other major applications slows down, the whole DRAM market will gradually shift to the state of oversupply Since the DRAM market is an oligopoly, the major suppliers will still have a significant leverage in price negotiations Quotes for server DRAM products could therefore rise further by 5-10% QoQ in 3Q21 However, given that prices have yet to be finalized for a substantial portion of 3Q21 contracts, the transaction volume is also very limited This, in turn, will inevitably create a lot of uncertainties with respect to the price trend in 4Q21
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/04/19
Thanks to their flexible pricing schemes and diverse service offerings, CSPs have been a direct, major driver of enterprise demand for cloud services, according to TrendForce’s latest investigations As such, the rise of CSPs have in turn brought about a gradual shift in the prevailing business model of server supply chains from sales of traditional branded servers (that is, server OEMs) to ODM Direct sales instead Incidentally, the global public cloud market operates as an oligopoly dominated by North American companies including Microsoft Azure, Amazon Web Services (AWS), and Google Cloud Platform (GCP), which collectively possess an above-50% share in this market More specifically, GCP and AWS are the most aggressive in their data center build-outs Each of these two companies is expected to increase its server procurement by 25-30% YoY this year, followed closely by Azure
TrendForce indicates that, in order to expand the presence of their respective ecosystems in the cloud services market, the aforementioned three CSPs have begun collaborating with various countries’ domestic CSPs and telecom operators in compliance with data residency and data sovereignty regulations For instance, thanks to the accelerating data transformation efforts taking place in the APAC regions, Google is ramping up its supply chain strategies for 2021 As part of Google’s efforts at building out and refreshing its data centers, not only is the company stocking up on more weeks’ worth of memory products, but it has also been increasing its server orders since 4Q20, in turn leading its ODM partners to expand their SMT capacities As for AWS, the company has benefitted from activities driven by the post-pandemic new normal, including WFH and enterprise cloud migrations, both of which are major sources of data consumption for AWS’ public cloud
Conversely, Microsoft Azure will adopt a relatively more cautious and conservative approach to server procurement, likely because the Ice Lake-based server platforms used to power Azure services have yet to enter mass production In other words, only after these Ice Lake servers enter mass production will Microsoft likely ramp up its server procurement in 2H21, during which TrendForce expects Microsoft’s peak server demand to take place, resulting in a 10-15% YoY growth in server procurement for the entirety of 2021 Finally, compared to its three competitors, Facebook will experience a relatively more stable growth in server procurement owing to two factors First, the implementation of GDPR in the EU and the resultant data sovereignty implications mean that data gathered on EU residents are now subject to their respective country’s legal regulations, and therefore more servers are now required to keep up the domestic data processing and storage needs that arise from the GDPR Secondly, most servers used by Facebook are custom spec’ed to the company’s requirements, and Facebook’s server needs are accordingly higher than its competitors’ As such, TrendForce forecasts a double-digit YoY growth in Facebook’s server procurement this year
Chinese CSPs are limited in their pace of expansions, while Tencent stands out with a 10% YoY increase in server demand
On the other hand, Chinese CSPs are expected to be relatively weak in terms of server demand this year due to their relatively limited pace of expansion and service areas Case in point, Alicloud is currently planning to procure the same volume of servers as it did last year, and the company will ramp up its server procurement going forward only after the Chinese government implements its new infrastructure policies Tencent, which is the other dominant Chinese CSP, will benefit from increased commercial activities from domestic online service platforms, including JD, Meituan, and Kuaishou, and therefore experience a corresponding growth in its server colocation business; Tencent’s demand for servers this year is expected to increase by about 10% YoY Baidu will primarily focus on autonomous driving projects this year There will be a slight YoY increase in Baidu’s server procurement for 2021, mostly thanks to its increased demand for roadside servers used in autonomous driving applications Finally, with regards to Bytedance, its server procurement will undergo a 10-15% YoY decrease since it will look to adopt colocation services rather than run its own servers in the overseas markets due to its shrinking presence in those markets
Looking ahead, TrendForce believes that as enterprise clients become more familiar with various cloud services and related technologies, the competition in the cloud market will no longer be confined within the traditional segments of computing, storage, and networking infrastructure The major CSPs will pay greater attention to the emerging fields such as edge computing as well as the software-hardware integration for the related services With the commercialization of 5G services that is taking place worldwide, the concept of “cloud, edge, and device” will replace the current “cloud” framework This means that cloud services will not be limited to software in the future because cloud service providers may also want to offer their branded hardware in order to make their solutions more comprehensive or all-encompassing Hence, TrendForce expects hardware to be the next battleground for CSPs
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
