Datacenter Chip Market - By Chip Type (Central Processing Unit, Graphics Processing Unit, Field-Programmable Gate Array, Application Specific Integrated Circuit), By Data Center Size, By Vertical Industry & Forecast, 2024 – 2032

Datacenter Chip Market Size

Datacenter Chip Market was valued at over USD 13.5 billion in 2023 and is estimated to register a CAGR of over 14.5% between 2024 and 2032. The data center chips market has been growing due to the increasing demand for cloud services. The rise of cloud computing has fueled the need for robust and flexible data center infrastructure for organizations. It means that companies are going to require high-performance data center chips as they enjoy elasticity, scalability and cost effectiveness offered by clouds. These chips enable the effective flow of information within the confines of these platforms by processing, storing and transmitting it efficiently. For instance, in November 2023, Amazon announced its latest datacenter chip Graviton4 specifically built for use in its cloud computing service.
 

The growth of energy efficiency and sustainability is becoming more important in the world today. Power consumption resulting from the explosion of data traffic, cloud computing and big data analytics has led to global environmental concerns and rising operational costs. This in turn increases the demand for chip solutions that will minimize power dissipation while maintaining high performance levels. Competitive advantage may be achieved by businesses investing in innovative chips designs that emphasize energy conservation and sustainable practices. Such companies utilize cutting-edge architectures, element innovations as well as fabrication techniques for their systems to optimize power usage, reduce heat generation and enhance eco-friendliness.
 

Data centers face a major predicament of meeting continuously changing demands for performance, energy efficiency and compatibility as technology moves ahead rapidly. Consequently, chips will be outdated faster, hence, leading to accelerated depreciation and increased costs for data center owners who must update their hardware components more frequently to stay competitive. In addition to this, shorter product life cycles result in e-waste through obsolescence due to upgrading old chips thus causing sustainability concerns and environmental problems.
 

Datacenter Chip Market Trends

Specialized processing functions have changed the data center chip market, with an increasing number of AI and machine learning workloads. Organizations are constantly utilizing AI and machine learning models for processing large volumes of data via processing chips, so to optimize themselves during operation. Some of the features found in data center chips meant for AI and ML applications include high parallelism, low precision arithmetic, purpose-built AI processors as well as dedicated accelerators among them TPUs or GPUs. For instance, in March 2022, NVIDIA launched a H100 data center chip designed to train large language models (LLMs) four times faster than A100; it also gives responses to user prompts approximately 30 times faster than its previous version-A100.
 

The transition to hyperscale data centers is an ongoing trend in the market for chips used in data centers, which has been driven by the rapid explosion of data that is generated and processed globally. Technology titans such as Google, Amazon and Facebook operate hyperscale data centers which require specific chips that can handle heavy workloads efficiently. They are made with scalability, energy efficiency as well as performance optimization to fit into hyperscale architectures, giving them a competitive edge over traditional microprocessors. Expansion of hyperscale datacenters to catch up with increasing data requirements has necessitated the development of new world-class ICs for this sector.
 

Datacenter Chip Market Analysis

Based on chip type, the market is segmented into central processing unit (CPU), graphics processing unit (GPU), field-programmable gate array (FPGA), application specific integrated circuit (ASIC), and others. The GPU segment dominated the market in 2023 with the share of over 30% due to its parallel processing capabilities making it perfect for handling compute-intensive workloads such as AI, machine learning and data analytics. Unlike traditional CPUs, GPUs do multiple calculations at once resulting in faster processing and improved performance on workloads with large datasets. Moreover, there has been an increase in deep learning and neural network-based applications that require GPUs for data centers because training and inference in such tasks rely on parallel computing.
 

Based on data center size, the market is segmented into small and medium size, and large size. The large size segment is anticipated to register a CAGR of over 15% from 2024 to 2032. The need for higher processing capabilities and memory capacity has given rise to a corresponding demand for bigger chips with more capacities to handle such tasks efficiently. This growth is also driven by the rapid spread of cloud computing services and the development of hyperscale data centers that need chips which can simultaneously deal with huge amounts of data and workloads. Large sized chips offer higher performance and efficiency, which enables data centers to handle intensive workloads more effectively and optimizes space utilization.
 

 

North America accounted for 37% revenue share of the global datacenter chip market in 2023. The region possesses a strong technology development infrastructure complemented by a large number of the main data center operators and cloud service providers. To support their ongoing upgrades and expansions of data center infrastructure, they require sophisticated chip technologies to facilitate their operations. Consequently, North America is an early adopter of emerging technologies such as artificial intelligence, machine learning, big data analytics which need specialized chips to deliver high-performance and power efficient processing capabilities. An increasing number of Internet of Things (IoT) devices are being used with industries becoming digitized, thus driving the demand for data center chips in this region.
 

Datacenter Chip Market Share

Huawei Technologies Co., Ltd. and NVIDIA Corporation held a share of over 15% in the datacenter chip industry in 2023. Huawei Technologies Co. is a significant player in the data center chip market, offering high-performance semiconductor solutions tailored for data processing and storage requirements. Their chips incorporate advanced architectures, such as Arm-based designs, coupled with specialized accelerators for tasks like AI inference and encryption.
 

NVIDIA is a dominant force in the data center chip market, primarily renowned for its GPU technology. In addition to its traditional focus on graphics, NVIDIA has expanded into AI (Artificial Intelligence) and high-performance computing. Its data center chips, like the Tesla series GPUs and NVIDIA A100 Tensor Core GPUs, excel in parallel processing tasks crucial for AI, machine learning, and scientific computing.
 

Datacenter Chip Market Companies

Major players operating in the market are:

• Huawei Technologies Co., Ltd.
• NVIDIA Corporation
• Taiwan Semiconductor Manufacturing Company Limited
• Intel Corporation
• Broadcom Inc.
• GlobalFoundries Inc.
• Samsung Electronics Co. Ltd.
   

Datacenter Chip Industry News

• In February 2024, Meta announced the deployment of a custom silicon chip for AI models, a new AI-optimized data center design and the second phase of its 16,000 GPU supercomputer for AI research.The latest release enables better personalization, safer and fairer products as well as richer experiences while helping businesses to target customers.
 

The datacenter chip market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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Market, By Chip Type

• Central Processing Unit (CPU)
• Graphics Processing Unit (GPU)
• Field-Programmable Gate Array (FPGA)
• Application Specific Integrated Circuit (ASIC)
• Others

Market, By Data Center Size

• Small and medium size
• Large size

Market, By Vertical Industry

• BFSI
• Government
• IT and telecom
• Transportation
• Energy & utilities
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• MEA
  • UAE
  • Saudi Arabia
  • South Africa
  • Rest of MEA