Increasing demand for GPUs and accelerators drove the data center server and storage component market to record growth in the first quarter of 2024, while shipments of general-purpose components also grew, and average selling price of components climbed, according to a new report from Dell’Oro Group.
Overall, the server and storage component market grew 152% during Q1 2024, and while it may not be a surprise that high demand for GPUs and custom accelerators for the hyperscale cloud market continues to play a major role, the research agency also noted that general-purpose server and storage components also experienced double-digit revenue growth during the first quarter following last year’s inventory correction cycle.
“While accelerators continue to set record shipments quarter after quarter, the unit growth of the traditional server and storage component market returned to positive year-over-year growth for the first time in eight quarters as vendors and the cloud service providers resume purchases in anticipation of higher system demand later this year,” stated Baron Fung, Senior Research Director at Dell’Oro Group.
Nvidia GPUs come at premium prices, as the company’s H100s sell for around $30,000, which has driven companies like Intel to position competing processors at lower cost levels. However, Fung said that average selling price for data center components across the board is increasing.
“Average selling price (ASP) of components has increased significantly from a year ago adding to top line growth,” he said. “For CPUs, an increasing mix toward fourth- and fifth-generation CPUs, which have more cores and feature sets compared to their predecessors, have commanded higher ASPs. Storage drives and memory have seen a significant increase in pricing as vendors ensure supply does not exceed demand. In the case of memory, the three major suppliers have shifted production capacity from DRAM to AI-focused HBM products.”
Back in January, Fung had noted that revenue from sales of AI accelerators had surpassed that of CPUs in 2023, a gap he said would “widen further” over the next five years (from 2023). At the same time, the overall Data Center IT and Semiconductor market is expected to ride a five-year compound annual growth rate of 25% to reach $286 billion by 2028. “We project accelerators, consisting mostly of GPUs, to account for nearly half of the total market,” Fung said at the time.
Among other highlights from Dell’Oro’s 1Q 2024 Data Center IT Semiconductors and Components Quarterly Report, Nvidia continued to lead all vendors in component revenues, followed by Samsung and Intel. The report found that Nvidia accounted for nearly half of the reported component revenues, as H100 GPU supplies improved for both the Cloud and Enterprise markets.
Meanwhile, it should come as no surprise that the agency expects strong growth for AI accelerators to continue for the rest of this year, with GPUs as the primary choice for training and inference.
Nvidia’s new Blackwell GPU platform positions it well in that regard. However, Dell’Oro added, “We also anticipate that custom accelerators and other vendors will gain some share with competitive offerings such as the AMD MI300X/MI325X Instinct and Intel Gaudi3 [the latter of which reportedly will be priced at a little more than half the cost of the H100].”