Accelerator Revenues Set to Double CPU Revenues

According to Dell'Oro, accelerators, primarily used for AI applications, have propelled the server semiconductor and component market to a remarkable 29% year-on-year growth in the third quarter of 2023. The research firm predicts that accelerator revenues will double CPU revenues this year.

"The server and storage system component market is expected to experience an 11% growth for the full year of 2023, largely driven by accelerators," says Baron Fung from Dell'Oro. "However, if we exclude accelerators, we forecast a 27% decline in revenue due to reduced demand for general-purpose computing caused by inventory adjustments made by system vendors and hyperscale cloud service providers."

Looking ahead to 2024, Fung anticipates strong double-digit growth in accelerator revenue. Additionally, Dell'Oro's forecasts indicate a comprehensive recovery in the market across various categories, including CPU, memory, storage drives, and network interface cards (NICs). Vendors are expected to increase their inventories in anticipation of healthier server demand. Alongside the unit growth of these component categories, pricing is also expected to improve in tandem with higher demand and the transition to the next-generation server platforms.

In the third quarter of 2023, NVIDIA led in server and storage system component revenues, driven by GPU accelerators. Intel and Samsung followed closely behind. This trend reflects a shift towards accelerated computing, as accelerator revenues are on track to surpass CPU revenues for the first time in 2023.

Although NIC shipments experienced a brief decline in the first half of 2023, they returned to growth in the third quarter. This growth was driven by the increased adoption of higher-speed ports and Smart NICs, particularly for accelerated computing.

Looking ahead to 2024, GPU revenue is forecasted to achieve a remarkable 70% growth. While NVIDIA currently dominates this market, potential challenges may arise from new competitive offerings by AMD and Intel. Additionally, the emergence of custom accelerators by hyperscale cloud service providers adds further complexity to the market.