Growth in demand for cloud and colocation services looks set to underpin new spending on data center infrastructure, according to a recently published report from Dell’Oro Group.
Data center physical infrastructure revenues are forecast to grow at an 8% compound annual growth rate from 2022 to 2027, reaching above $35 billion. Macroeconomic uncertainty and lingering supply chain constraints are currently acting as short-term headwinds, said Dell’Oro, noting that long-term growth is forecast to remain resilient supported by sustainability-minded cloud and colocation data center expansions and on-premises enterprise modernization.
“Next generation processors and accelerators, from the likes of AMD, Intel, and NVIDIA, are rapidly changing the power and thermal management requirements for data center physical infrastructure,” said Lucas Beran, Principal Analyst at Dell’Oro Group. “The Thermal Design Power (TDP) of these semiconductor components continues to rise, with TDPs of 350W and 400W for the latest generation of CPUs, and up to 700W for GPUs. And product roadmaps show further increases from here. This is ultimately leading to higher rack power densities, with architectural changes in backup power, power distribution, and thermal management required.”
At the same time, added Beran, data center sustainability has risen to the top of decision making, planning, and design criteria in the industry: “This has opened the door for a significant technology transition during this forecast period – the transition from air to liquid-based thermal management. The two primary technologies, direct liquid cooling and immersion cooling, single-phase and two-phase, are forecast to grow significantly and reach $1.7 billion, or 24 percent, of thermal management revenue by 2027,” he continued.
Additional highlights from the report include that Asia Pacific, excluding China, is forecast to grow at the fastest CAGR during the forecast period, followed by EMEA and China. Data Center Thermal Management is forecast to grow at the fastest rate of any market segment during the forecast period, surpassing $7 billion in vendor revenues in 2027. The service provider customer segment is forecast to grow at a double-digit CAGR during the forecast period, while the Enterprise customer segment is expected to grow at a much lower rate.
In a separate Dell’Oro report, global data center capex is shown to be on track to reach $400 billion by 2027, with hybrid cloud generating data center market growth opportunities for both the hyperscale and enterprise markets.
“While the cloud hyperscalers will account for half the data center infrastructure spending by 2027, significant opportunities exist on-premises,” said Baron Fung, Research Director at Dell’Oro Group. “Enterprises will continuously optimize their IT deployments, balancing workloads in the multi-cloud with those on-premises. New applications will also demand infrastructure at the edge leading to the emergence of a new ecosystem. Furthermore, upcoming advances in new server architectures, accelerated computing, and sustainability will enable greater efficiencies in the data centers of the future.”
Issues around data centers and cloud will be on the agenda along with many other tech topics at the following event next week:
Global Media Summit 2023 – NetEvents
