Global server shipment forecast and industry analysis, 2020

Taiwan-based server manufacturers' revenues generated from server-related business, including motherboards, racks, storage devices and network equipment, kept growing to reach NT$887 billion (US$29.64 billion) in 2019, up 2.3% year-over-year. Their revenues outperformed their shipments (down 1.4% year-over-year) mainly due to enhanced product spec and increased sales of storage and network devices.

Going forward into 2020, rebounding market demand will boost Taiwan-based server manufacturers' revenues by 6%-7% year-over-year. Server shipments will also resume growth. Both Taiwan-based manufacturers' shipments and global shipments will show over 6-8% increases.

In terms of server shipments, as some customers placed more orders than what they actually needed over the past two years, they turned more conservative with their orders in 2019, resulting in a decline in global server shipments. Going forward into 2020, after a year of inventory depletion, server shipments will likely exhibit positive growth. As a matter of fact, the market was already showing signs of recovery from both the customer and manufacturer sides in fourth-quarter 2019.

The growth in server demand in 2019 still came mainly from US-based large-scale data center operators including Facebook and Amazon. China-based vendors including Lenovo and Inspur also showed strong demand/shipments as they benefited from Huawei's lost market share due to the US trade ban. Looking into 2020, US-based large-scale data center operators will still be the major force driving server shipments while Huawei will recover lost ground.