Diverse server production ecosystem

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Global data center deployments are still dominated by China and the United States, but the proportion outside China and the United States is gradually increasing, and overall demand is still strong. Taiwan’s server industry is still booming. According to DIGITIMES Research analyst Frank Kung, the server industry in Taiwan still has a chance for 6% growth in 2022, although the customer structure is very different.

DIGITIMES Research has worked with three major component distributors, namely WPG, WTMicroelectronics and Avnet, to compile information on several key industries and jointly understand the changes and demand for parts in key industries, and servers are one of them. According to the latest quarterly statistics from DIGTIMES Research, the total production volume of servers worldwide was 16.25 million units in 2019, 17 million units in 2020 and will reach 18.04 million units in 2022, now essentially an upward trend, but with gradual structural changes.

We can roughly divide server clients into several categories. Meta, Amazon, Google and Microsoft are in demand for their own use, and in the demand structure of network giants actively deploying cloud centers, the annual growth rate of these four major manufacturers is more than 10%.

Hewlett-Packard (HP), Dell and Lenovo sell servers under their own brands, but these traditional majors are gradually transforming to increase the share of systems integration, thus betting not on “quantity” but on “quality”. Supermicro, a US-based server startup with close ties to Taiwan, continues to grow well and has the highest production share in Taiwan.

In the wake of the US-China trade war, Chinese companies continue to increase their self-production rates, with Lenovo estimated to have a 68% self-production rate in 2022 and Inspur, which targets giants local networks, to have an 80% self-production rate in 2022. As for Huawei, which was the most affected, its sales fell by 39% in 2021. In 2022, it could follow the model of mobile phones , which sees sourcing, production, and shipments handled by other systems.

Currently, 39% of the global data center market is concentrated in the United States, China contributes 10%, and the rest is spread across different countries. Now, regional data centers are also increasing in size, coupled with the impact of the US-China trade war, many manufacturers are expanding production to Taiwan, and there are also operators in Thailand and Malaysia. .

In addition to the impact of the trade war, recent lockdowns in Chinese cities have created major problems for manufacturers.

Global server shipments, 2018-2022 (k units)

Source: DIGITIMES Research, May 2022

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