• The global server market is booming thanks to cloud and AI infrastructure investments
• Research house Omdia expects the market to be worth $229bn this year
• Taiwan’s Foxconn pips Dell to the top spot, but the market is very fragmented, reports Omdia

Driven by demand for cloud services and, in particular, AI, the global server market is set to more than double in value this year to be worth $229bn, with Taiwan’s Foxconn pipping Dell to the global market leader post thanks to surging demand for its AI-optimised servers, according to research firm Omdia. 

While the server market hit a lull in 2023 with a value of $122.5bn, it has ramped up dramatically this year due to very high demand from the hyperscale datacentre giants – Amazon Web Services (AWS), Microsoft and Google – as well as Meta, as the graphic above shows. 

That level of investment led to “astronomical” growth in Foxconn’s server sales, which are expected to hit $29bn this year, putting it at the top of the server sector pile with a market share of 12.7%. According to Omdia, Dell had taken the global server ranking top spot from Hewlett Packard Enterprise (HPE) in 2018, but now it has been topped by the Taiwanese vendor (the first non-US vendor to take the crown).  

And there’s further growth to come for the market leader, according to Omdia senior principal analyst Manoj Sukumaran. “Foxconn has more growth ahead, having secured a close partnership with Nvidia to manufacture Blackwell GPU reference designs. [Foxconn] will become the largest supplier of NVL36 and NVL72 racks to cloud service providers,” noted the analyst.

But Foxconn isn’t the only server vendor ending 2024 with a smile. “Despite ranking shifts, all server vendors will see 2024 as a major success due to significant market growth,” stated Sukumaran, who noted that Quanta Cloud Technologies (QCT), ZT Systems and Supermicro are on course to more than double their server revenues year on year in 2024. It should be noted that Omdia is only counting direct sales to customers and not revenues from servers made by original device manufacturers (ODMs), such as Foxconn, for original equipment manufacturers (OEM) to avoid double counting, so Foxconn’s ascent to the top is thanks to its direct sales channel.  

Dell’s growth rates might not be in the triple figures, but the vendor’s servers are in very high demand. For its fiscal third quarter that ended 1 November, Dell reported a 58% year-on-year increase in server and networking product revenues to $7.4bn, noting “demand growth across AI and traditional servers”. And the demand is unrelenting, noted Dell’s chief operating officer, Jeff Clarke. “Interest in our portfolio is at an all-time high, driving record AI server orders demand of $3.6bn in Q3 and a pipeline that grew more than 50%, with growth across all customer types,” he stated. 

While the server market is very fragmented, the biggest players do account for a large chunk of the spending and selling. As Omdia notes, just 10 companies will be responsible for almost 60% of the global server investments, while just 10 companies will fulfil more than 70% of market demand.

And what of the future? Omdia expects the global server market to grow by 22% next year to be worth more than $280bn in 2025, hit $380bn by 2028 and approach $500bn by 2030.  

- Ray Le Maistre, Editorial Director, TelecomTV