Analysis of the Development Status and Industry Trends of China's AI Servers in 2023
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AI servers are the core infrastructure for AI computing in intelligent computing, providing data servers capable of delivering artificial intelligence. They can support local applications and web pages, as well as offer complex AI models and services for cloud and local servers, adapting to various application scopes and enhancing data processing capabilities through heterogeneous forms such as CPU+GPU/TPU/ASIC/FPGA.
Reviewing the development history of mainstream servers, with the surge in data volume and the increasing complexity of data scenarios, various types of servers have emerged for different scenarios: general-purpose servers, cloud computing servers, edge computing servers, and AI servers.
AI servers are typically equipped with acceleration chips such as GPUs, FPGAs, and ASICs. The combination of CPUs and acceleration chips can meet the demands of high-throughput interconnections, providing robust computing power for AI application scenarios like natural language processing, computer vision, and machine learning, supporting both AI algorithm training and inference processes.
AI Server Industry Chain
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 potentially transitioning to JDM models in the future. The downstream mainly comprises various customer groups purchasing servers. The end customers in the downstream are primarily B2B and G2B clients, including internet companies, cloud service providers, telecom operators, government agencies, and financial institutions.
Upstream Analysis
Integrated circuits are also the core hardware of AI servers. Looking at the production of integrated circuits in China in recent years, there has been an upward trend, increasing from 156.49 billion units in 2017 to 359.43 billion units in 2021, with a slight decrease to 324.19 billion units in 2022.
Midstream Analysis
In recent years, with the accelerated development of AI industrialization, global AI infrastructure spending has continued to show high growth. The global AI server market has been expanding, reaching $18.3 billion in 2022.
Downstream Analysis
The rapid development of artificial intelligence represents a significant strategic opportunity to profoundly transform human life. China is utilizing AI to establish developmental advantages and accelerate the pace of innovation. AI is increasingly becoming a part of daily life in Chinese society. China ranks second globally in this field, trailing only the United States. In 2022, the core AI industry in China reached a scale of 0.51 trillion yuan.
Current State of AI Server Development
With the ongoing popularity of ChatGPT and the launch of GPT-4, global AI models are undergoing upgrades. China's major models include Baidu's ERNIE, Huawei's Pangu, Alibaba's Tongyi, Tencent's Hunyuan, and SenseTime's visual models. Domestic AI models are also accelerating their breakthroughs.
In 2022, the global server market grew by 20.1% year-on-year, reaching $123.224 billion. It is projected that the market size will slightly increase to $128.471 billion in 2023, with annual growth rates of 11.8%, 10.2%, 9.7%, and 8.9% over the next four years. By 2027, the market size is expected to reach $189.139 billion.
The growth of big data and cloud computing has driven demand for AI-powered servers. Currently, the server market is still dominated by CPU servers, which are more versatile but less specialized. As data volumes increase, along with advancements in algorithms, computing power, and storage capabilities, the requirements for server data processing capabilities are gradually rising. Manufacturers primarily rely on GPU servers to address the computational speed limitations of CPU servers. However, in certain applications, the computational power of GPUs remains insufficient, creating a market need for more powerful server core solutions.
With the accelerated development of AI industrial applications, global spending on AI infrastructure continues to show high growth. In 2021, the global AI server market was valued at $15.6 billion, exceeding the overall AI market growth rate of 22.5%. In 2022, the market size reached approximately $18.3 billion. As computational power continues to grow and AI models for natural language processing, images, and videos advance, AI servers will be more widely adopted. The global AI server market is projected to reach $21.1 billion in 2023.
Analysis of Trends in China's AI Server Industry
Supercomputing Market Holds Promise, with Supercomputing + Cloud Computing Driving New Growth in Servers
With the further expansion of AIGC, cloud computing technologies, and application models, the demand and application scenarios for supercomputing continue to grow. Numerous supercomputing center construction and upgrade projects are emerging, fueling rapid market growth. In the future, the integration of supercomputing centers with cloud computing and internet technologies will expand applications from precision manufacturing, information security, oil exploration, aerospace, and scientific computing to pharmaceuticals, gene sequencing, animation rendering, digital film, data mining, financial analysis, and internet services. The substantial demand for servers in supercomputing centers is expected to become a new growth driver for the server market.
High-End Server Market Growth
The supercomputers that form supercomputing centers can perform up to 100 petaflops per second, equivalent to the computing power of over 2 million ordinary computers. They handle large-scale, complex calculations beyond the capabilities of standard computers and servers. Unlike data centers that operate in a distributed manner and rely on software for scalability, supercomputing centers adopt a centralized cluster logic with high coupling and superior single-machine performance. Their applications are primarily focused on high-performance computing (HPC), currently providing the computational speed and storage capacity required for national high-tech fields and cutting-edge research. Given their specialized nature, they impose higher demands on servers. As supercomputing centers continue to expand, high-end servers are expected to drive further growth in the server market.
AIGC Drives Continuous Expansion of the GPU Server Market
With the rapid advancement of artificial intelligence (AI) technology empowering various industries and supporting innovative services, future cloud computing demand driven by AIGC (AI-Generated Content) will be a sustained growth driver in the IaaS sector. Major cloud computing providers are actively investing in AI to capitalize on future trends. Currently, Amazon AWS has established a comprehensive AI ecosystem encompassing AI platforms, AI services, and AI infrastructure, partnering with NVIDIA to focus on large-scale machine learning model training and generative AI application development. Microsoft, leveraging ChatGPT, has launched applications like Microsoft 365 Copilot, New Bing, and Security Copilot. Google has developed the LaMDA large language model and introduced its AI product, Bard.