DCPI revenue growth slows in 4Q 2023, maintains double-digit yearly growth

Data Center Physical Infrastructure (DCPI) revenue growth continued to decelerate in 4Q 2023, but maintained double-digit year-over-year (Y/Y) growth, according to Dell’Oro. This capped off a record year of 16 percent revenue growth.

“In my nearly decade-long coverage of the DCPI market, 2023 marked the highest year of revenue growth I’ve observed. This growth was primarily the result of vendors fulfilling pandemic induced backlogs delayed by supply chain constraints, with a marginal contribution from sales linked to AI workloads,” said Lucas Beran, Research Director at Dell’Oro Group. “This is because building new data center facilities generally takes 18 – 24 months, and new purpose-built facilities to support AI workloads are expected to start materializing in the second half of 2024.

“Evidence indicates that these deployments are nearing. Vertiv, the market share leader in data center thermal management, secured its first quarter of notable liquid cooling deployments, which is correlated to higher TDP processors associated with accelerated computing. This is only the beginning, as Vertiv plans to increase liquid cooling manufacturing capacity by 45 times in 2024. This underscores the critical role that data center power and cooling systems play in our increasingly digital world,” continued Beran.

Additional highlights from the 4Q 2023 Data Center Physical Infrastructure Quarterly Report:

• Eaton, Munters, and Mitsubishi Electric led all vendors in market share gains in 4Q 2023.
• North America, Asia Pacific (excluding China), Europe, and the Middle East and Africa (EMEA) paced market growth in 4Q 2023 with double-digit growth rates. Caribbean and Latin American (CALA) revenues grew at a much lower rate, while the China market was the only region to decline.
• A bifurcation in hardware sales became more prominent in 4Q 2023, with product growth such as single-phase UPS, IT racks and rack power distribution notably slowing. Larger system sales, such as Three-phase UPS, Thermal Management and Facility Power Distribution grew at much faster rates.
• Looking ahead, we forecast worldwide DCPI market growth to moderate in the first half of 2024, but accelerate through the second half of the year as physical infrastructure deployments related to AI workloads increase.

Dell’Oro