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Global data center chip market to hit US$ 17.8bln by 2032

The global data center chip market size reached US$ 10.9 Billion in 2023. Looking forward, the market is projected to reach US$ 17.8 Billion by 2032, exhibiting a growth rate (CAGR) of 5.60% during 2023-2032, according to Research and Markets.

Major Market Drivers: The extensive utilization of cloud computing services by businesses and consumers is among the primary factors driving the data center chip market outlook. Moreover, the escalating demand for powerful and energy-efficient chips to support virtualization, storage, networking, and other critical workloads is also catalyzing the market growth.

Key Market Trends: The integration of specialized hardware accelerators, such as GPUs (Graphics Processing Units), TPUs (Tensor Processing Units), and FPGAs (Field-Programmable Gate Arrays) to optimize the performance of AI workloads is propelling the data center chip market trends. Additionally, the growing popularity of advanced semiconductor process nodes, such as 7nm and 5nm, to enable higher transistor density, improved performance, and lower power consumption is also catalyzing the global market.

Competitive Landscape: Some of the major market players in the data center chip industry include Achronix Semiconductor Corporation, Advanced Micro Devices Inc., Arm Limited, Broadcom Inc., Fujitsu Limited, GlobalFoundries Inc., Huawei Technologies Co. Ltd., Intel Corporation, Marvell Technology Inc., Nvidia Corporation, Taiwan Semiconductor Manufacturing Company Limited, among many others.

Geographical Trends: North America accounted for the largest share in the data center chip market analysis, owing to the development of advanced telecommunications infrastructure and reliable power supply. Besides this, the increasing number of leading companies, the inflating investments in cloud computing, and the extensive utilization of data-intensive applications are stimulating the data center chip market statistics in the region.

Challenges and Opportunities: The extensive processing of complex workloads, including AI/ML, high-performance computing, and big data analytics, while minimizing power consumption and latency poses challenges for the market. However, the development of customized chip solutions, including application-specific integrated circuits (ASICs) and domain-specific architectures (DSAs) for specific uses presents significant growth opportunities for the data center chip market share.

The Increasing Demand for Cloud Services and Big Data Analytics
The expanding infrastructure of cloud service providers, such as Microsoft Azure, Amazon Web Services (AWS), and Google Cloud is propelling the market growth. Besides this, the escalating demand for data centers to store, manage, and process large amounts of information is further stimulating the data center chip market growth. For instance, Amazon Web Services Inc. has launched a supply chain management application that would eliminate the requirement for businesses to utilize multiple systems and vendors to access critical network data.

AWS Supply Chain is a machine learning-powered application that automatically combines and analyzes data across numerous supply chain systems, creating a “unified data lake.” Moreover, in May 2023, IBM unveiled IBM Hybrid Cloud Mesh, a SaaS offering that was developed to facilitate enterprises to obtain management to their hybrid multi-cloud infrastructure.

Expanding IoT and Edge Computing
The growing popularity of edge data centers to process and analyze the data generated from IoT devices, such as smart wearables, sensors, and connected appliances in real-time is positively influencing the data center chip market demand. Moreover, the extensive utilization of these components to enhance data security, reduce latency, and enable faster decision-making is acting as another significant growth-inducing factor. For instance, according to the data from GSMA Intelligence, the 5G market penetration worldwide is expected to increase from 3% in 2020 to 64% in 2030.

Additionally, as part of the Digital India initiative, the Government of India has planned to give IoT a push in the country. The government has allocated INR 7,000-crore funds to develop 100 smart cities in the country powered by IoT devices. The government intends to control traffic, efficiently use water and power, and collect data using IoT sensors for healthcare and other services.

Growth of AI and Machine Learning Applications
The escalating demand for advanced data center chips in AI and ML algorithms to process and analyze vast amounts of datasets is positively influencing the market growth. Besides this, the incorporation of AI and ML across various industries, such as healthcare, retail, finance, and autonomous vehicles to improve efficiency and make data-driven decisions is also bolstering the market growth. For instance, in April 2023, Oracle Corporation and GitLab Inc. announced the availability of a new offering that expands ML and AI functionalities.

Customers can run AI and ML workloads with GPU-enabled GitLab runners on Oracle Cloud Infrastructure (OCI) and get access to deploy cloud services wherever needed, including on-premises and multi-cloud environments. Moreover, Inflection AI secured one of the largest artificial machine learning funding rounds, totaling US$ 225 Million. It is referred to as a machine learning and AI startup. It is expected to improve machine learning, allowing for intuitive human-computer interfaces in the near future. Research and Markets

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