Data Center Renovation Market Analysis

Data Center Renovation Market Analysis

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Based on product, the data center renovation market is categorized into cooling, power, IT racks & enclosures, networking equipment, LV/MV distribution, and DCIM. The networking equipment segment held a market share of around 32% in 2022 and is expected to reach approx. 37% by 2032. The rising demand for strong networking solutions for data traffic management is boosting the networking equipment segment trends.

Modern data centers require high-speed, low-latency networking equipment to efficiently manage and distribute data. For instance, in March 2022, Huawei Technologies Co., Ltd. launched the CloudEngine High Availability Multicast (HAM) data center switches: CloudEngine 6860-HAM and CloudEngine 8850-HAM. These are suitable for the financial, insurance, and high-end manufacturing industries, assisting businesses in developing large-scale production & processing systems. The rising prevalence of digitalization across sectors has accelerated the demand for strong networking solutions for data traffic management, thereby stimulating data center renovation.

Based on application, the data center renovation market is divided into BFSI, colocation, energy, government, healthcare, industrial, IT & telecom, and others. The IT & telecom segment held a dominant market share in 2022. The growing 5G penetration has resulted in higher internet user traffic, fueling the demand for data center renovation and ensuring efficient data traffic management. For instance, in January 2022, Orange S.A. launched a 5G network rollout plan in Spain on the 700 MHz frequency spectrum. The company planned to gradually expand this technology in over 1,100 towns & cities by the 2022. Telecom operators are focusing on enhancing customer experience by incorporating advanced power and cooling & networking solutions into their systems and are heavily investing in network infrastructure upgrades.

North America led the data center renovation market with a major share of around 37% in 2022. The growing use of AI is complementing the surge in data traffic by increasing computational demands. AI applications require substantial computing power and generate vast datasets, necessitating enhancements in existing data centers. This trend is particularly prominent in the U.S., where AI-driven industries such as tech and healthcare thrive. To meet these demands, data center renovation is crucial to accommodate advanced hardware, high-performance computing clusters, and improved cooling solutions, positioning the U.S. at the forefront of AI innovation.