Global server shipments continued to decline in 2023

Although the recent period has seen a substantial decline in consumer demand for PCs, a ripple effect has even touched the hitherto stable server market, thereby unsettling the entire semiconductor supply chain. Recent statements from TrendForce, supported by the latest data and research, reveal an anticipated continued downtrend in server shipments throughout 2023.

In light of cloud service providers successively reducing their orders, server OEM manufacturers have downgraded their annual shipment estimates between February and April of this year. Compounded by international circumstances and economic factors, the outlook for server demand appears bleak. TrendForce anticipates global server shipments will shrink to 13.835 million units this year, marking a 2.85% reduction compared to last year.

The server market performed poorly in the first half of the year. Coupled with end-inventory corrections, the first quarter—traditionally a slow season—saw server shipments fall by 15.9% quarter-on-quarter. The second quarter did not witness the sharp increases of previous years, with a mere 9.23% quarter-on-quarter growth. Besides the de-stocking of the supply chain and a decrease in manufacturers’ orders, environmental concerns also affected server usage. Companies have adapted to cost-control measures, generally extending the service life of servers, indirectly impacting the market’s procurement.

The much-discussed ChatGPT has spurred shipments of AI servers this year, with cloud service providers, including Microsoft and Google, actively participating. AI server shipments are predicted to grow more than 10% this year. However, the proportion of AI servers is less than 10% of the entire server market, so their impact on overall server sales is minimal.

TrendForce suggests that a server market reversal depends on the speed of de-stocking. Ideally, this could occur in the second half of this year, although it may not happen until the first half of next year. This situation affects the introduction of new platforms and lowers the purchasing intent for products like DDR5 memory, leaving the possibility of a further decline in server shipments this year.