Accelerator Revenues Are Expected to Exceed CPU Revenues By a Factor of 2.

In the third quarter of 2023, the server semiconductor and component market experienced a remarkable 29% year-over-year growth, largely propelled by the increased adoption of accelerators, particularly for AI applications. According to Dell’Oro, the revenues from accelerators are expected to surpass those from CPUs, doubling this year's figures. This surge in accelerator utilization is the primary driving force behind the projected 11% growth in the server and storage system component market for the entire year of 2023.

Looking forward to 2024, Dell’Oro's Baron Fung anticipates robust double-digit growth in accelerator revenue. Additionally, comprehensive market recovery is expected across various categories, including CPU, memory, storage drives, and network interface cards (NICs), as vendors anticipate healthier server demand and increase their inventories. With the unit growth of these component categories, it is also expected that pricing will improve in line with heightened demand and the transition to next-generation server platforms.

NVIDIA emerged as the leader in server and storage system component revenues in the third quarter of 2023, driven by the popularity of GPU accelerators, followed closely by Intel and Samsung. The rise in accelerator revenues has signaled a notable industry shift toward accelerated computing, further illustrated by the expected milestone of accelerator revenues surpassing those of CPUs for the first time in 2023.

Furthermore, despite a brief decline in NIC shipments in the first half of 2023, there was a return to growth in the third quarter, driven by the increased adoption of higher-speed ports and Smart NICs, particularly in the context of accelerated computing. Looking ahead, GPU revenue is forecasted to achieve a substantial 70% growth in 2024. While NVIDIA currently dominates this market, potential competition is expected to come from new offerings by AMD and Intel, along with the emergence of custom accelerators by hyperscale cloud service providers. This landscape sets the stage for an exciting and dynamic trajectory for the server and storage system component market in the coming years.