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AI server explosion drove accelerator revenues by 224 percent in 2023

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, strong demand for AI servers drove the revenues for GPU and custom accelerators by 224 percent in 2023. In 2024, in addition to continued growth momentum for AI infrastructure, we expect a broad recovery for the server and storage system component market as some of the hyperscale cloud service providers enter an expansion cycle, and enterprise IT spending gradually unfreezes.

“The accelerator market is set to maintain strong growth momentum as the hyperscale cloud service providers deploy next-generation AI infrastructure for larger training models and increasing inferencing demands,” stated Baron Fung, Senior Research Director at Dell’Oro Group. “Enterprise adoption of AI applications is rising, driving the need for infrastructure in both public cloud and private data centers. With major product updates every two years, this market demands frequent infrastructure replacements, leading to higher capital investments. Furthermore, the recovery in the general-purpose computing and storage component market is underway after an extended correction. Fourth-generation CPUs from Intel and AMD, expected to ship in high volumes this year, will enable end-users to realize benefits in server efficiency and footprint optimizations. Pricing for commodities such as memory and storage drives will also rise this year, as supplies normalize, and from the deployment of new server architectures,” explained Fung.

Additional highlights from the 4Q 2023 Data Center IT Semiconductors and Components Quarterly Report:

  • NVIDIA led in server and storage system component revenues in 2023, driven by GPU accelerators, followed by Intel and Samsung.
  • Accelerator revenues surpassed CPU revenues for the first time in 2023, reflecting a shift towards accelerated computing.
  • GPU revenue is forecasted to achieve strong double-digit growth in 2024. Although NVIDIA currently dominates this market, potential challenges arise from new competitive offerings by AMD and Intel, coupled with the emergence of custom accelerators by major cloud service providers.
  • Smart NIC revenues grew more than 50 percent in 2023, driven by strong hyperscale adoption for both AI and non-AI use cases.

CT Bureau

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