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Cloud expansion to lift data center capex double-digits in 2022

According to a recently published report from Dell’Oro Group, the trusted source for market information about the telecommunications, networks, and data center IT industries, most of the major cloud service providers will undergo an expansion cycle this year, which would lift worldwide data center capex by double-digits in 2022. However, we believe persistent supply chain constraints could limit growth.

“In 2021, worldwide data center capex grew nine percent and surpassed $200 billion for the first time,” said Baron Fung, Research Director at Dell’Oro Group. “However, growth mainly came from higher server average selling prices as vendors pass on higher commodity and supply chain costs to end-users, while units grew low single-digits due to supply constraints. New server platforms, equipped with next-generation processors and AI-accelerators also contributed to higher revenue growth. The market is primed for further acceleration this year as vendors navigate through the ongoing sourcing challenges. New data center footprint, network upgrade cycle, and the continued adoption of accelerated computing are expected to drive higher spending among the major cloud service providers and enterprise customers,” explained Fung.

Additional highlights from the 4Q 2021 Data Center IT Capex Quarterly Report:

  • Worldwide data center capex forecast to exceed $240 billion in 2022.
  • Server unit shipments are forecast to return to double-digit growth this year, as supply constraints ease.
  • Hyperscale cloud service providers scheduled to launch services in more than 40 new regions in 2022.

CT Bureau

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