TrendForce underscores that the primary momentum for server shipments this year remains with American CSPs. However, due to persistently high inflation and elevated corporate financing costs curtailing capital expenditures, overall demand has not yet returned to pre-pandemic growth levels. Global server shipments are estimated to reach approximately. 13.654 million units in 2024, an increase of about 2.05% YoY. Meanwhile, the market continues to focus on the deployment of AI servers, with their shipment share estimated at around 12.1%.

Foxconn is expected to see the highest growth rate, with an estimated annual increase of about 5-7%. This growth includes significant orders such as Dell's 16G platform, AWS Graviton 3 and 4, Google Genoa, and Microsoft Gen9. In terms of AI server orders, Foxconn has made notable inroads with Oracle and has also secured some AWS ASIC orders.

Last year, Arm introduced its Neoverse Compute Subsystem (CSS) for the N2 and V2 series of data center processors, providing a reference platform for the development of efficient Arm-based chips. Major cloud service providers like AWS with Graviton 4 and Trainuium 2, Microsoft with Cobalt 100 and Maia 100, and even NVIDIA with Grace CPU and Bluefield DPUs are already utilizing custom Arm server CPU and accelerator designs based on the CSS foundation in their data centers. The CSS allows hyperscalers to optimize Arm processor designs specifically for their workloads, focusing on efficiency rather than outright performance. Today, Arm has unveiled the next generation CSS N3 and V3 for even greater efficiency and AI inferencing capabilities. The N3 design provides up to 32 high-efficiency cores per die with improved branch prediction and larger caches to boost AI performance by 196%, while the V3 design scales up to 64 cores and is 50% faster overall than previous generations.

Both the N3 and V3 leverage advanced features like DDR5, PCIe 5.0, CXL 3.0, and chiplet architecture, continuing Arm's push to make chiplets the standard for data center and cloud architectures. The chiplet approach enables customers to connect their own accelerators and other chiplets to the Arm cores via UCIe interfaces, reducing costs and time-to-market. Looking ahead, Arm has a clear roadmap for its Neoverse platform. The upcoming CSS V4 "Adonis" and N4 "Dionysus" designs will build on the improvements in the N3 and V3, advancing Arm's goal of greater efficiency and performance using optimized chiplet architectures. As more major data center operators introduce custom Arm-based designs, the Neoverse CSS aims to provide a flexible, efficient foundation to power the next generation of cloud computing.

At AWS re:Invent, Amazon Web Services, Inc. (AWS), an Amazon.com, Inc. company (NASDAQ: AMZN), today announced the next generation of two AWS-designed chip families—AWS Graviton4 and AWS Trainium2—delivering advancements in price performance and energy efficiency for a broad range of customer workloads, including machine learning (ML) training and generative artificial intelligence (AI) applications. Graviton4 and Trainium2 mark the latest innovations in chip design from AWS. With each successive generation of chip, AWS delivers better price performance and energy efficiency, giving customers even more options—in addition to chip/instance combinations featuring the latest chips from third parties like AMD, Intel, and NVIDIA—to run virtually any application or workload on Amazon Elastic Compute Cloud (Amazon EC2).

Once upon a time, the data center market represented a duopoly of x86-64 makers AMD and Intel. However, in recent years companies started developing custom Arm-based processors to handle workloads as complex within smaller power envelopes and doing it more efficiently. According to Counterpoint Research firm, we have the latest data highlighting a significant new player called Ampere Computing in the data center world. With the latest data center revenue share report, we get to see Intel/AMD x86-64 and AWS/Ampere Arm CPU revenue. For the first time, we see that a 3rd party company, Ampere Computing, managed to capture as much as 1.54% market revenue share of the entire data center market in 2022. Thanks to having CPUs in off-the-shelf servers from OEMs, enterprises and cloud providers are able to easily integrate Ampere Altra processors.

Intel, still the most significant player, saw a 70.77% share of the overall revenue; however, that comes as a drop from 2021 data which stated an 80.71% revenue share in the data center market. This represents a 16% year-over-year decline. This reduction is not due to the low demand for server processors, as the global data center CPU market's revenue registered only a 4.4% YoY decline in 2022, but due to the high demand for AMD EPYC solutions, where team red managed to grab 19.84% of the revenue from 2022. This is a 62% YoY growth from last year's 11.74% revenue share. Slowly but surely, AMD is eating Intel's lunch. Another revenue source comes from Amazon Web Services (AWS), which the company filled with its Graviton CPU offerings based on Arm ISA. AWS Graviton CPUs accounted for 3.16% of the market revenue, up 74% from 1.82% in 2021.

Facing global economic headwinds, the four major North American cloud service providers (CSPs) have scaled back their server procurement quantities for 2023 and could make further downward corrections in the future. Meta is the leader among the four in terms of server demand reduction, followed by Microsoft, Google, and AWS. TrendForce has lowered the YoY growth rate of their total server procurement quantity for this year from the original projection of 6.9% to the latest projection of 4.4%. With CSPs cutting demand, global server shipments are now estimated to grow by just 1.87% YoY for 2023. Regarding the server DRAM market, prices there are estimated to drop by around 20~25% QoQ for 1Q23 as CSPs' downward corrections exacerbate the oversupply situation.

Looking at the four CSPs individually, the YoY decline of Meta's server procurement quantity has been widened to 3.0% and could get larger. The instability of the global economy remains the largest variable for all CSPs. Besides this, Meta has also encountered a notable obstacle in expanding its operation in Europe. Specifically, its data center in Denmark has not met the regional standard for emissions. This issue is expected to hinder its progress in setting up additional data centers across the EU. Moreover, businesses related to e-commerce account for about 98% of Meta's revenue. Therefore, the decline in e-commerce activities amidst the recent easing of the COVID-19 pandemic has impacted Meta's growth momentum. Additionally, Meta's server demand has been affected by the high level of component inventory held by server ODMs.

Amazon Web Services (AWS) cloud division is extensively developing custom Arm-based CPU solutions to suit its enterprise clients and is releasing new iterations of the Graviton series. Today, during the company re:Invent week, we are getting a new CPU custom-tailored to high-performance computing (HPC) workloads called Graviton3E. Given that HPC workloads require higher bandwidth, wider datapaths, and data types span in multiple dimensions, AWS redesigned the Graviton3 processor and enhanced it with new vector processing capabilities with a new name—Graviton3E. This CPU is promised to offer up to 35% higher performance in workloads that depend on heavy vector processing.

With the rising popularity of HPC in the cloud, AWS sees a significant market opportunity and is trying to capture it. Available in the AWS EC2 instance types, this chip will be available with up to 64 vCPU cores and 128 GiB of memory. The supported EC2 tiers that will offer this enhanced chip are C7gn and Hpc7g instances that provide 200 Gbps of dedicated network bandwidth that is optimized for traffic between instances in the same VPC. In addition, Intel-based R7iz instances are available for HPC users in the cloud, now powered by 4th generation Xeon Scalable processors codenamed Sapphire Rapids.

The demand for data is insatiable, from 5G to the cloud to smart cities. As a society we want more autonomy, information to fuel our decisions and habits, and connection - to people, stories, and experiences.

To address these demands, the cloud infrastructure of tomorrow will need to handle the coming data explosion and the effective processing of evermore complex workloads … all while increasing power efficiency and minimizing carbon footprint. It's why the industry is increasingly looking to the performance, power efficiency, specialized processing and workload acceleration enabled by Arm Neoverse to redefine and transform the world's computing infrastructure.

Qualcomm is a company well known for designing processors going inside a vast majority of smartphones. However, the San Diego company has been making attempts to break out of its vision to focus on smartphones and establish new markets where it could show its potential for efficient processor design. According to Bloomberg's insights, Qualcomm is planning to re-enter the server market and try again to compete in the now very diverse space. In 2014, Qualcomm announced that the company is developing an Arm ISA-based CPU that will target servers and be an excellent alternative for cloud service providers looking at efficient designs called Centriq. Later on, in November of 2017, the company announced the first CPU Centriq 2400, which had 48 custom Falkor cores, six-channel DDR4 memory, and 60 MB of L3 cache.

What happened later is that the changing management of the company slowly abandoned the project, and the Arm CPU market was a bit of a dead-end for many projects. However, in recent years, many companies began designing Arm processors, and now the market is ready for a player like Qualcomm to re-enter this space. With the acquisition of Nuvia Inc., which developed crazy fast CPU IPs under the leadership of industry veterans, these designs could soon see the light of the day. It is reported that Qualcomm is in talks with Amazon's AWS cloud division, which has agreed to take a look at Qualcomm's offerings.

Amazon's AWS division has been making Graviton processors for a few years now, and the company recently announced its Graviton3 design will soon to available in the cloud. Today, we are witnessing a full launch of the Graviton3 CPUs with the first instances available in the AWS Cloud. In theC7g instances, AWS customers can now scale their workloads across 1-64 vCPU instance variants. Graviton3's 64 cores run at 2.6 GHz clock speed, 300 GB/sec maximum memory bandwidth, DDR5 memory controller, 64 cores, seven silicon die chiplet-based design, 256-bit SVE (Scalable Vector Extension), all across 55 billion transistors. Paired with up to 128 GiB of DDR5 memory, these processors are compute-intensive solutions. AWS noted that the company used a monolithic computing and memory controller logic design to reduce latency and improve performance.

One interesting thing to note is the motherboard that AWS hosts Graviton3 processors in. Usually, server motherboards can be single, dual, or quad-socket solutions. However, AWS decided to implement a unique solution with three sockets. This tri-socket setup is designed to see each CPU as an independent processor, managed by a Nitro Card, which can handle exactly three CPUs. The company notes that the CPU is now in general availability with C7g instances and you can see it below.