Datacentre ICs to Experience 25% CAGR from 2024-2028

The datacentre IC market is projected to experience a compound annual growth rate (CAGR) of 25% between 2024 and 2028, according to Dell'Oro Group. The research firm predicts that accelerators, primarily consisting of GPUs, will contribute to nearly half of the total market.

"In a significant development in 2023, accelerator revenues surpassed those of CPUs. The gap between accelerator and CPU revenues is expected to widen further in the next five years as accelerated computing gains traction across various domain-specific workloads, ultimately enhancing overall efficiency in data centers," says Baron Fung, an analyst at Dell'Oro Group.

Accelerators Taking the Lead

The rise of accelerators in the datacentre IC market is a notable trend. With their ability to handle specific workloads more efficiently, accelerators have become increasingly popular. As a result, Dell'Oro Group predicts that accelerators will continue to outperform CPUs in terms of revenue growth.

On the other hand, CPU revenue growth is expected to be moderate over the next five years. This is due to reduced demand for general-purpose servers and extended replacement cycles for hyperscalers. However, the CPU landscape is becoming more diverse, offering compelling choices for both x86 and ARM architectures. This diversity is driving innovation, with future generations of CPUs expected to have significantly increased core counts and embedded accelerators.

Memory and Storage Drive Growth

Memory is anticipated to experience high growth in the datacentre IC market. This is driven by the increased demand for high-bandwidth memory, which is essential for handling large amounts of data in data centres. Additionally, storage drives, including HDDs and flash storage, are projected to have robust growth. The proliferation of AI applications is expected to place greater emphasis on data storage, driving the demand for storage drives.

Disruption from Cloud Service Providers

Major cloud service providers (SPs) are developing their own custom processors, such as CPUs, accelerators, and Smart NICs, in an effort to optimize their infrastructure. This could potentially disrupt the long-term growth and ecosystem of the datacentre IC market. As cloud SPs continue to innovate and tailor their hardware to their specific needs, traditional IC vendors may face challenges in maintaining their market share.

In conclusion, the datacentre IC market is poised for significant growth in the coming years. Accelerators, with their ability to enhance efficiency in data centres, are expected to drive revenue growth. However, the landscape is evolving, with diverse choices for CPUs and increasing demand for memory and storage drives. Additionally, the disruptive efforts of cloud service providers could reshape the market. It will be interesting to see how these trends unfold and impact the datacentre IC industry.