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Easing supply chain constraints boosted DCPI to 18% revenue growth in Q1

According to a recently published report from Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, Data Center Physical Infrastructure (DCPI) market revenue growth accelerated for the fifth consecutive quarter to 18 percent in 1Q 2023. This elevated level of growth was supported by a combination of easing supply chain constraints, resulting in increases of unit shipments, as well as continued price realization as vendors passed on higher costs of raw materials, components, and logistics. Despite this growth, vendor backlogs did not come down from historic levels, prompting upward revisions from DCPI vendors and to our 2023 DCPI forecast.

“Discounting the market rebound in 2Q 2021, related to the soft Y/Y comparison brought on by Covid, I’ve never witnessed such elevated growth in the DCPI market since I began covering it in 2015,” said Lucas Beran, Research Director at Dell’Oro Group. “Even as new orders expectedly declined in 1Q 2023, vendor backlogs did not, with many vendors reporting book-to-bill ratios at or near 1.0x. This was certainly a surprise, and increases my confidence in the 2023 market outlook and overall health of the DCPI market,” added Beran.

Additional highlights from the 1Q 2023 Data Center Physical Infrastructure Quarterly Report:

  • Vertiv and Mitsubishi Electric notably gained revenue share in 1Q 2023.
  • North America, Asia Pacific (excluding China) and Europe, the Middle East and Africa (EMEA) were the fastest-growing regions in 1Q 2023, at double-digit growth rates. The Caribbean and Latin American (CALA) revenue growth slowed to a single-digit rate, while China was the only DCPI market with revenues to decline Y/Y.
  • Product growth was broad-based, but thermal management and cabinet PDU and busway grew at the fastest rates as a result of easing fan and breaker supply chain constraints. IT racks and containment was the only market segment with revenue growth to meaningfully decelerate.
  • Dell’Oro Group’s worldwide DCPI revenue growth forecast for 2023 was raised to 12 percent. This upward revision was due to multiple DCPI vendors raising full year guidance as supply chain constraints ease. 2023 revenue growth will continue to be supported by historically high DCPI vendor backlogs, with higher growth in the first half of the year.

Dell Oro

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