Data Center Semiconductor Market Surges 152% in 1Q 2024: Dell’Oro Group

According to a recently published report by Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the server and storage component market grew 152 percent in 1Q 2024, reaching a new record. This rapid growth is primarily the result of high demand for GPUs and custom accelerators for the hyperscale cloud market. General-purpose server and storage components also experienced double-digit revenue growth following an inventory correction cycle in 2023.

“While accelerators continue to set record shipments quarter after quarter, the unit growth of the traditional server and storage component market returned to positive year-over-year growth for the first time in eight quarters as vendors and the Cloud service providers resume purchases in anticipation of higher system demand later this year,” stated Baron Fung, Senior Research Director at Dell’Oro Group. “Average selling price (ASP) of components has increased significantly from a year ago adding to topline growth. For CPUs, an increasing mix toward fourth- and fifth-generation CPUs, which have more cores and feature sets compared to their predecessors, have commanded higher ASPs. Storage drives and memory have seen a significant increase in pricing as vendors ensure supply does not exceed demand. In the case of memory, the three major suppliers have shifted production capacity from DRAM to AI-focused HBM products,” explained Fung.

Additional highlights:

  • In 1Q 2024, NVIDIA led all vendors in component revenues, followed by Samsung and Intel. NVIDIA accounted for nearly half of the reported component revenues as H100 GPU supplies improved for both the Cloud and Enterprise markets.
  • Strong growth for accelerators is expected to continue into 2024. GPUs will remain the primary choice for training and inference, with NVIDIA’s upcoming Blackwell platform strengthening the firm’s leadership. We also anticipate that custom accelerators and other vendors will gain some share with competitive offerings such as the AMD MI300X/MI325X Instinct and Intel Gaudi3.
  • Smart NIC and DPU revenues grew more than 50 percent in 1Q 2024, driven by strong hyperscale adoption for both AI and non-AI use cases.

About the Report
Dell’Oro Group’s Data Center IT Semiconductors and Components Quarterly Report tracks revenue, unit and capacity shipments and unit and capacity pricing, along with market share of major semiconductor and component manufacturers that supplies into the data center server and storage system markets starting from 2018. Technology of focus will be major server and storage semiconductors and components such as CPUs, accelerators such as GPUs, FPGAs, and custom AI ASICs, Ethernet and InfiniBand NICs and Smart NICs, HDDs, NAND/SSDs. In addition, Dell’Oro Group will provide a forecast of the demand for these components based on shipments of servers and storage system to the hyperscale cloud service providers and to the rest-of-the-market.

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