Development and Demand in the AI Server Industry: China's AI Server Market Size to Reach $9.1 Billion in 2023
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The internet industry is one of the largest application scenarios for AI servers. The explosive growth of global data volume has driven continuous increases in data storage demand. Compared to traditional mechanical hard drives, solid-state drives are more efficient and have become the mainstream storage devices for AI servers. In recent years, global shipments of solid-state drives have shown an upward trend.
Driven by the ongoing impact of ChatGPT, domestic demand for AI computing power is expected to maintain its growth momentum, benefiting computing power server manufacturers. Estimates suggest that ChatGPT's total computing power requires the support of 7 to 8 data centers, each with an investment scale of 3 billion yuan and a computing power of 500P. In the era of the digital economy, global data volume and computing power scale will experience rapid growth.
AI servers help provide real-time computing services for various AI applications. There are two main architectures for AI servers: one is a hybrid architecture that allows data to be stored locally, and the other is a cloud-based architecture that uses remote storage technology and hybrid cloud storage (a technology combining local and cloud storage) for data storage.
Development and Demand in the AI Server Industry
Artificial intelligence is accelerating its transition from perceptual intelligence to generative intelligence, driving rapid growth in the demand for AI computing power. The development of large models and generative AI has significantly boosted the growth of the AI server market.
As a critical foundation for the development of the digital economy, computing power resources are being propelled by new digital phenomena, business models, and applications, leading to diversified scenarios. The continuous expansion of computing power scale has driven sustained increases in demand. According to data from the Ministry of Industry and Information Technology, the total scale of data center racks in use nationwide exceeded 6.5 million standard racks in 2022. Over the past five years, the average annual growth rate of total computing power has exceeded 25%.
The upstream of the AI server industry chain mainly includes chips, PCBs, connectors, cables, power supplies, and various interfaces. The midstream primarily consists of server brands and OEM/ODM manufacturers, with OEM/ODM likely to gradually transition to the JDM model in the future.
The downstream mainly comprises various customer groups purchasing servers. The end-user groups listed here are primarily B2B and G2B clients, including internet companies, cloud service providers, telecom operators, government agencies, and financial institutions.
As of August 2023, over 30 cities in China have built intelligent computing centers, with a total construction scale exceeding 20 billion yuan.
International Data Corporation (IDC) and Inspur Information jointly released the 2023–2024 China AI Computing Power Development Assessment Report. The report predicts that China's AI server market size will reach $9.1 billion in 2023, a year-on-year increase of 82.5%, and will grow to $13.4 billion by 2027, with a compound annual growth rate of 21.8%.
Artificial intelligence is rapidly advancing from perceptual intelligence to generative intelligence, leading to a surge in AI computing power demand. Reports estimate that from 2022 to 2027, China's intelligent computing power scale will grow at a compound annual growth rate (CAGR) of 33.9%, while general computing power will see a CAGR of 16.6%. The global AI hardware market (servers) is projected to expand from $19.5 billion in 2022 to $34.7 billion in 2026, with a CAGR of 17.3%.
AI Server Shipments Expected to Soar
NVIDIA's AI server shipments are forecasted to increase by 150% or more in 2024, with ultra-low-loss CCL (copper-clad laminate) currently in tight supply. The CCL usage in AI servers is approximately eight times that of general servers. After NVIDIA upgrades its AI servers to the B100 solution in the second half of 2024, CCL usage is expected to rise further. Beyond existing high-end general servers and PCs/laptops, future AI PCs will also require upgrades to ultra-low-loss CCL.
Currently, the gross margins of CCL manufacturers are lower than before the price reduction cycle, suggesting the industry is nearing the end of this cycle. Historically, after price hikes and reductions, the market enters a period of stability, but the overall downward trend is largely over, indicating an imminent industry recovery.
China ranks among the global leaders in AI server technology. AI servers, which utilize a CPU + accelerator chip architecture, offer greater efficiency advantages in model training and inference. Unlike the monopolistic landscape of foreign AI chip manufacturers, China's AI server capabilities are world-class.
Surging Demand for AI Servers
Analysts note that the AI era is driving massive data generation, fueling an ever-growing demand for computing power and AI servers. This, in turn, is boosting the need for interface chips that handle data transmission within and outside servers.
In a highly competitive market, timely and effective decision-making is crucial for businesses and investors. Reports on China's AI server industry provide detailed analyses of development trends, competitive landscapes, and market dynamics, covering policy, economic, social, and technological factors. These insights help identify opportunities and challenges, offering valuable guidance for strategic investments and planning, while also serving as a key reference for government agencies.