Global server shipments estimated annual increase of 2.3% in 2024

As supply chains persistently recalibrate their inventories, the anticipated shipment volume of servers for 2023 has been duly adjusted downward. This mirrors a market sentiment imbued with heightened prudence regarding this year’s prospects. Beyond the shortfall in anticipated demand, this is largely influenced by the modulation of component stockpiles and clients reigning in financial expenditures. While the winds of Artificial Intelligence (AI) have propelled a surge in associated server shipments, they are tethered by a broader market downturn. It is projected that the shipments of server motherboards and complete systems will respectively decline year-on-year by 6-7% and 5-6%.

Recent data and studies disseminated by TrendForce suggest that due to an ambiguous economic scenario compounded by augmented investments in the AI realm, the outlook for the server market in 2024 bears a resemblance to that of 2023, with machine shipments being curtailed by overarching circumstances.

TrendForce postulates three potential trajectories for server market shipments in 2024, each delineated by specific influencing factors and expectations:

Scenario One: Assuming inventory depletion reaches its culmination, there exists a moderate probability of market rejuvenation. However, constrained by pronounced inflation and subsequent economic stagnation, primary investments remain focused on the AI domain, with budgets for other sectors being circumscribed and incrementally gravitating towards cloud services. For 2024, annual server shipments are anticipated to witness a modest year-on-year growth of 2-3%, rendering this the most plausible scenario.

Scenario Two: Amidst an economic downturn with supply chain inventories yet to be fully assimilated, overall demand remains conservative. The needs of the AI sector continue to overshadow traditional server infrastructure, leading to the projection that the total annual server shipments for 2024 will either remain stagnant or even diminish.

Scenario Three: The market has reverted to its pre-pandemic vitality, ushering in an optimistic market prognosis. This signifies elevated consumer spending and burgeoning IT outlays by corporations, potentially catalyzing a robust growth in server shipments for 2024, with an anticipated year-on-year increase nearing 5%.

Furthermore, TrendForce contends that a confluence of factors has significantly impacted the shipment forecasts for Intel’s Sapphire Rapids and AMD’s Genoa, subsequently affecting the penetration rate of DDR5. It is anticipated that the timeframe for DDR5 adoption to eclipse DDR4 will be protracted, with expectations now set for realization towards the end of the third quarter in 2024.