The server market welcomes the new normal of the cloud, and the data center has become the main driver of DRAM demand in recent years

What will happen next year in the booming server market under the epidemic? TrendForce believes that the cloud theme continues to ferment, which will help the overall server demand to expand, and the server shipments will maintain a growth rate of 6% to 7% next year. At the same time, the implementation of data centers has become the main driver of DRAM demand in recent years, accounting for more than 50% of DRAM market consumption and more than 30% of shipments in the whole year.

On November 12, at the “MTS 2021 Storage Industry Trends Summit” hosted by TrendForce, an international high-tech industry research institution, TrendForce senior analyst Liu Jiahao brought an analysis of the storage terminal market in the post-epidemic era to the audience.

Pandemic catalyzes cloud business opportunities

“In recent years, due to the gradual maturity of artificial intelligence technology and the popularization of intelligent terminal devices, most application services are integrated through servers.” At the beginning of the speech, Liu Jiahao first sorted out the trend of digital transformation in recent years.

Liu Jiahao believes that 2008 is a watershed year. The development of intelligent terminals superimposes the demands of enterprises to move to the cloud, and the communication between servers becomes more and more important. Entering 2020, the market share of servers has exceeded 30%. Liu Jiahao pointed out that with the commercialization of 5G, driven by applications such as unmanned driving and industrial Internet of Things, it is expected that the proportion of servers will exceed 45% in 2025, even surpassing the consumption of mobile devices.

Liu Jiahao pointed out that 5G commercialization will also drive the growth of micro data centers and edge computing, and become the main axis of industrial development from 2021 to 2025. Changes in the industrial structure and substantial progress in server computing units will also drive the development of server architectures that are completely different from traditional application services.

Liu Jiahao analyzed the impact of the post-epidemic new normal on the server market from four aspects: remote working, lifestyle changes, geopolitics and data sovereignty.

In addition to office work, people’s entertainment methods have also changed, which has driven the growth of demand for online shopping, short videos, and games, triggering changes in the server industry. Liu Jiahao took short video companies as an example. It was observed that ByteDance’s servers turned to Taiwan ODMs and drove this market.

Intensified geopolitical risks are also a trend that has emerged after the epidemic. Liu Jiahao pointed out that whether it involves communication products, smartphones or cloud services, Huawei has demonstrated excellent supply chain integration capabilities. 70% of Huawei’s server services are for domestic enterprises or telecom operators, and only 30% are overseas. In addition, Huawei’s server supply chain is mainly concentrated in Taiwan, and local supporting measures may be added in the future, which will not have much impact on server shipments next year.

In addition, data autonomy is also a big variable. At present, various countries have stricter requirements for data landing. In response to the European Union’s General Data Protection Regulation (GDPR), Google expanded its data centers in Asia Pacific and the European Union this year, which is expected to drive the construction of small and medium-sized data centers. Liu Jiahao believes that this demand will probably continue until 2025.

Server Shipment and Price Forecast

Liu Jiahao estimates that server shipments will maintain a growth rate of 6% to 7% next year. However, he also emphasized that if the epidemic is more severe, capital investment will be more limited, and the growth of data centers cannot be ruled out to remain at 3% to 4%.

Taking into account the positive impact of the new normal after the epidemic, Liu Jiahao has a positive attitude towards the data center market next year. He believes that data centers will grow by about 16% next year. Liu Jiahao emphasized, “In terms of traditional manufacturers moving to the cloud, it is possible to decline by 3% to 4% every year, unless there is a more flexible strategy internally. It is estimated to be 27% to 28% next year, mainly focusing on whether the new infrastructure can be fermented as scheduled. .”

Globally, the cloud theme is not going away, but intensifying over time. In terms of data centers, several major Internet companies have not yet seen the ceiling, so it is expected that more and more servers will be used in data storage in the future, and the proportion will reach more than 60% in the next few years.

Liu Jiahao looked forward to the server DRAM market and pointed out that from 2017 to 2021, most of the market will move towards servers. After 5G is launched in 2025, some edge computing needs will also be transferred to servers. Specifically, it is estimated that the original factory will switch to higher-capacity storage next year, which will also be relatively beneficial to the output value contribution.

From 2016 to 2018, there was a situation of overlapping demand in the market, and both smartphones and data centers in China were in great demand at this stage, resulting in higher server prices. After 2018, the market gradually tends to balance.

Liu Jiahao gave a price judgment at the end of the speech: From the perspective of the trend, the demand of the original factory will have a certain impact on the price trend. The rise in prices from more than 100 to more than 300 between 2016 and 2018 is unlikely to happen again, unless there is emerging demand.

“We think demand will grow next year, and due to the impact of destocking, prices may reverse after February next year, and after the reversal to two or three quarters, they may fall again.”

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