Single-digit growth is predicted, based on supply chain problems
Data Center Capital Expenditure (capex) grew at the fastest rate in three years in 1Q 2022 A new report From the Del’Oro Group. According to research director Baron Fang of Del’Oro Group, the cost of new cloud installations and superior data center infrastructure has driven those costs despite supply chain constraints.
Fung said data center customers have increased supply chain costs, which is reflected in the average price of higher data center equipment sales across the board.
“We expect further growth in data center capex later this year, as the top 4 cloud service providers expand their services and server memory prices tend to be higher,” Fung said.
Fung said the new server architecture also increases demand in the market.
Semiconductor manufacturers have been able to get products into the data center pipeline they have been well rewarded. Intel’s Data Center Group (DCG) reported আ 7.3 billion in quarterly revenue last year, up 20% year-on-year and hitting 22% in the first quarter of this year.
Fung noted that the demand for advanced accelerated computing products has also driven data center capex spending.
The strong demand for accelerated computing devices for data centers is certainly a component of Nvidia’s recent quarterly success, where it continues to post record sales. Nvidia’s accelerated computing products use Intel CPUs, their graphics processing units (GPUs), and expensive RAM and custom interconnect hardware. High density of custom hardware, high average revenue per unit (ARPU) to help drive data center sales upward.
Nvidia’s recent advances include systems based on its Grace Hopper “superchip” architecture, an arm-licensed semiconductor design that the company says offers better data center access efficiency and scalability. The company has developed a number of new designs for data centers aimed at improving operational efficiency, including a new liquid-cooling system. Nvidia is also advancing computational muscle to power the next generation of artificial intelligence (AI) and machine learning (ML) technologies.
Dell’s ISG business unit reported $ 9.3 billion in revenue earlier this month, up 16% from 1.1 billion in operating income. It focuses on Dell Business Unit data center sales. Dell’s storage revenue rose 9% to $ 4.2 billion, and server and network revenue topped $ 5 billion, up 22% year-over-year (YoY).
Dell’Oro’s Fung predicts global data center capax growth across 2022. But he hopes that the continuing supply chain challenges that data center equipment vendors continue to experience will eventually limit capex growth to “high single digits” for the rest of the year.
The top four US cloud service providers – Amazon, Google, Meta and Microsoft – are expected to launch services in 30 new regions this year, which will continue to grow the data center, the report said. Together, the ten largest cloud service providers spent more than $ 88 billion on data center infrastructure in 2021.
