Data Center Chip Market Size to grow by USD 2.90 billion between 2023-2027
According to a research report “ Data Center Chip Market” by Product (GPUs, ASICs, CPUs, FPGAs) Business Segment (Small, medium, Large) Geography (North America, APAC, Europe, South America, Middle East and Africa)- Global Forecast to 2027 published by Technavio, the market size is estimated to grow by USD 2.90 billion, at a CAGR of 3.54% during the forecast period. In the rapidly evolving data center landscape, companies are continually seeking to enhance their capabilities to keep pace with the dynamic environment. Next-generation chips, such as Application-Specific Integrated Circuits (ASICs) and Field-Programmable Gate Arrays (FGPAs), play a pivotal role in optimizing connected devices and data centers. These advanced chips can efficiently adapt to shifting data center requirements and accelerate performance in various applications, ultimately improving overall data center efficiency. For instance, Arm Ltd, a leading technology company, has introduced a next-generation technology, Neoverse N1, designed to challenge data centers and artificial intelligence applications. This new instruction set architecture (ISA) is a significant milestone in the chip industry, setting the foundation for future software compatibility and innovation..
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By Product, the GPUs segment is projected to dominate the market size in 2024
In the data center market, GPUs, initially developed by NVIDIA Corporation (NVIDIA), have become indispensable due to their ability to execute vast calculations per second. These advanced processors, originally designed for graphics processing, have since expanded their capabilities to offload CPU workloads, thereby enhancing overall computing efficiency. The neural network processing principle shares similarities with image manipulation, making GPUs the preferred choice for AI systems. They are instrumental in both the training and inference phases. The primary reason fueling the segment's growth is the escalating demand for high-bandwidth capabilities, which exceeds the limitations of GDDR5 and subsequent interfaces.
By Business Segment, Small segment is expected to hold the largest market size for the year 2024
Small and medium-sized data centers, despite their smaller scale compared to large data centers, demand exceptional reliability from their underlying devices. The importance of uninterrupted operations in these data centers necessitates a high degree of dependency on the reliability of the chip technology. Infrastructure in small and medium data centers must not only meet this demand but also be adaptable to continuous growth and upgrades. This reliance on chip technology, which enhances productivity, energy efficiency, redundancy, and flexibility, is fueling the increasing demand for data center chips in this sector.
North America is forecasted to hold the largest market size by region in 2024
The data center chip market in North America is poised for significant growth, driven by escalating investments from hyperscale cloud providers, colocation service providers, and enterprises. These organizations are upgrading their IT infrastructure to accommodate edge computing, 5G, multi-cloud services, big data analytics, and the IoT. The US, as the data center hub in North America, hosts major data centers in cities like Atlanta, Northern Virginia, Chicago, Dallas/Ft. Worth, and Silicon Valley. In addition, the Canadian data center chip market is experiencing growth due to increasing demands from colocation providers and cloud service providers. Overall, these expansion plans are anticipated to fuel the demand for data center chips in North America in the coming years.
The Data Center Chip Market growth and forecasting report also includes detailed analyses of the competitive landscape of the market growth and forecasting and information about 20 market companies, including:
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Research Analysis Overview
The Data Center Chip Market in the IT & telecom industry is experiencing significant growth due to the increasing demand for advanced computing solutions in web applications, big data analytics, and machine learning algorithms. Manufacturers are focusing on developing chip technology that caters to the unique requirements of databases and cloud computing. FPGA (Field-Programmable Gate Array) chips are gaining popularity due to their flexibility and ability to handle complex computational tasks. Collaborations between industry leaders like Red Hat OpenShift, McAfee, Mastercard, Oracle Corporation, IBM, Google Cloud, and Microsoft Azure are driving innovation in the market. Geographical expansion is another key trend, with companies expanding their operations to cater to the growing demand in regions like Asia-Pacific and Europe. The use of chip technology in smart computing devices is also expected to fuel market growth. The integration of machine learning algorithms and big data analytics in chip technology is expected to revolutionize the industry, providing more efficient and effective solutions for businesses.
Market Research Overview
The Data Center Chip Market is witnessing significant growth due to the increasing demand for neural network-based applications, deep learning, and data analytics in hyperscale data centers. The GPU segment is leading the market, driven by the requirements of AI processors and accelerators for machine learning algorithms and big data analytics. FPGA and other processing chips are also gaining popularity for their parallelism and low-precision arithmetic capabilities. Large data center owners, including Facebook and Google, are investing heavily in innovative chip designs for improved performance and competitive advantage. However, technology compatibility and power consumption are major concerns, leading to a focus on energy efficiency and sustainability. Global environmental concerns have also accelerated depreciation for e-waste and the adoption of energy-efficient chips. Key players in the market include Amazon (Graviton4), Facebook, Google, and other hyperscale data center operators. Collaborations between these companies and chip manufacturers are driving geographical expansion and the development of smart computing devices for data center operations. Industry verticals such as cloud services, energy & utilities, transportation, IT & telecom, manufacturing, and government are also adopting advanced chip technology for their large-size data centers. Key applications include machine learning algorithms, big data analytics, databases, web applications, and industry-specific workloads. Market leaders are also focusing on collaborations with companies like Red Hat OpenShift, McAfee, Mastercard, Datasamudra, Tele India Datacenter, KDDI, Acer, Inflection AI, and the Government of India to expand their reach and offer comprehensive solutions.
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