Global server market, 2Q 2023

With traditional cloud spending of enterprises and consumers continuing to be undermined by the hiking interest rate in mature markets and subsiding cloud service demand in the post-pandemic era, datacenter establishment of cloud service providers (CSPs) has also been decelerating, leading to CSPs shifting parts of their general server budget to higher-price AI servers to cater to the growing popularity of generative AIs. As a result, overall server procurement in units was down in the second quarter of 2023.

Leading North American CSPs including Meta and Amazon were pessimistic toward demand for their social media and public cloud services and thus significantly reduced their server purchases, resulting in a more than 10% decline in Taiwanese ODMs' shipments to their US-based datacenter operator clients.

Global server shipments are projected to moderately rebound by 1.5% in the third quarter. As traditional cloud service demand shows no sign of recovery, North American CSPs will step up their spending on high-end AI servers that are dozens of times more expensive than general ones, leading to a small sequential decline in overall server shipments. Server brands' shipments may exhibit a high single-digit sequential growth with the launch of servers featuring new AMD and Intel CPUs.