Covers the data center and edge server markets, including vendor market share; enterprise, cloud, and communications service provider investments; and semiconductor-level transitions.

Omdia view

The continued rise of costly AI servers is skewing the market

The following are highlights of the quarter:

  • The server market’s revenue grew 42% quarter-over-quarter (QoQ) and 59% year-over-year (YoY) in 4Q23.
  • Server unit shipments were up 2.82 million in 4Q23, representing a 6% growth QoQ; however, YoY units declined 20% from the highs in 4Q22.
  • In 2023, NVIDIA shipped more than 150,000 HGX servers. These expensive servers have an average ASP of $250,000, compared to the average ASP of other servers that are slightly below $8,000. This price difference leads to HGX servers comprising 1.4% of servers shipped but accounting for 30.6% of revenue, skewing revenue numbers.
  • A few vendors significantly benefited from selling NVIDIA’s DGX and HGX servers to the top 10 cloud providers. Super Micro’s revenue grew 70.5% QoQ, and ODM Direct’s revenue grew 61.6% QoQ and has doubled since 2Q23.
  • Conventional server shipments recovered from their slump in 2Q23 as the server refresh cycle started to affect the older servers neglected by cloud service providers’ (CSPs) significant artificial intelligence (AI) spending.
  • The rapid growth of AI servers has once again pushed the 2023 and 2024 revenue forecasts up. Server revenue in 2023 surpassed $122.5 billion; it should be above $195 billion in 2024.
  • The server market stabilized in 2H23, with low single-digit unit growth from 2Q23 to 4Q23. Omdia foresees this trend continuing into 2024 despite a predicted seasonal drop in server units in 1Q24.

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