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.

LG Electronics (LG) is ramping up its strategic collaboration with the global tech powerhouse, Meta Platforms, Inc. (Meta), aiming to expedite its extended reality (XR) ventures. The aim is to combine the strengths of both companies across products, content, services and platforms to drive innovation in customer experiences within the burgeoning virtual space.

Forging an XR Collaboration With Meta
On February 28, LG's top management, including CEO William Cho and Park Hyoung-sei, president of the Home Entertainment Company, met with Meta Founder and CEO Mark Zuckerberg at LG Twin Towers in Yeouido, Seoul. This meeting coincided with Zuckerberg's tour of Asia. The two-hour session saw discussions on business strategies and considerations for next-gen XR device development. CEO Cho, while experiencing the Meta Quest 3 headset and Ray-Ban Meta smart glasses, expressed a keen interest in Meta's advanced technology demonstrations, notably focusing on Meta's large language models and its potential for on-device AI integration.

Apple's Vision Pro mixed reality headset is due to launch on February 2—many rival companies in the AR/VR market space will be taking notes once the slickly designed device (with a $3499 starting price) reaches customers. The Wall Street Journal claims that the executive team at Meta is hopeful that Apple's headset carves out a larger space within a niche segment. The latter's "more experimental" products sometimes have surprising reach, although it may take a second (i.e cheaper) iteration of the Vision Pro to reach a mainstream audience. Meta is reported to have invested around $50 billion into its Quest hardware and software development push—industry experts reckon that this product line generates only ~1% of the social media giant's total revenue.

Insider sources suggest that CEO Mark Zuckerberg and his leadership team are keen to see their big money "gamble" finally pay off—Apple's next release could boost global interest in mixed reality headsets. The Wall Street Journal states that Meta staffers "see the Quest and its software ecosystem emerging as a primary alternative to Apple in the space, filling the role played by Google's Android in smartphones." They hope that the Quest's relatively reasonable cost-of-entry will look a lot more attractive when compared to the premium Vision Pro. The report also shines a light on Meta's alleged push to focus more on mixed reality applications, since taking "inspiration" from Apple's WWDC23 presentation: "In addition, some developers are simplifying their apps and favor Apple's design that allows wearers to use their eyes and fingers to control or manipulate what they see. Meta's Quest primarily relies on the use of controllers for games or applications, although it can work with finger gestures."

Microsoft is discontinuing Windows Mixed Reality. This was discovered when the company added it to a list of deprecated Windows features. The Windows Mixed Reality platform, along with its accompanying Mixed Reality Portal app, and Mixed Reality for Steam VR, are on the list. For now it is deprecated, and Microsoft says that it will be removed in a future release of Windows. Mixed Reality was released in 2017, during the thick of the VR craze in the tech industry, a time when Facebook, having acquired Oculus, and betting big on the Metaverse, an endeavor that cost the company over $20 billion since. Mixed Reality served as a gateway to games and apps in the VR space. The company developed its own HoloLens Mixed Reality headset rivaling Oculus Rift, and got its OEM partners, such as Acer, Dell, Lenovo, ASUS, and HP, to invest in ones of their own. In all this, it doesn't look like Microsoft is winding down its enterprise-focused HoloLens 2 headset just yet.

Realizing the full potential of next-generation deep learning requires highly efficient AI infrastructure. For a computing platform to be scalable and cost efficient, optimizing every layer of the AI stack, from algorithms to hardware, is essential. Advances in narrow-precision AI data formats and associated optimized algorithms have been pivotal to this journey, allowing the industry to transition from traditional 32-bit floating point precision to presently only 8 bits of precision (i.e. OCP FP8).

Narrower formats allow silicon to execute more efficient AI calculations per clock cycle, which accelerates model training and inference times. AI models take up less space, which means they require fewer data fetches from memory, and can run with better performance and efficiency. Additionally, fewer bit transfers reduces data movement over the interconnect, which can enhance application performance or cut network costs.

D-Link Corporation exclusively partnered with Meta to launch the DWA-F18 VR Air Bridge, which received rave reviews after its debut in North America last year. The DWA-F18 VR Air Bridge was released in Europe this July. This wireless adapter not only supports the Meta Quest 2 and Meta Quest Pro headsets but also the latest release of this year, the Meta Quest 3.

The DWA-F18 VR Air Bridge offers simple setup and optimized performance for Meta Quest headsets, enhancing user experience by leveraging the power of Wi-Fi 6 to establish a high-speed, low-latency connection between gaming PCs and Meta Quest headsets.

Big news from the Connect stage: Meta Quest 3 hits shelves October 10, and pre-orders are open now! The world's first mass-market mixed reality headset starts at $499.99 USD for the 128 GB version and $649.99 USD for those who want a larger storage capacity at 512 GB. But wait, there's more! For a limited time, your Meta Quest 3 purchase comes bundled with Asgard's Wrath 2 - a $59.99 USD value. And for the 512 GB SKU, we'll also kick in a six-month trial of Meta Quest+ for a combined value of over $100 USD.

Mixed Reality: Explore Like Never Before
Immersive experiences can transport you to fantastical worlds that defy the laws of physics, but the physical world—and the connections you've made there—are pretty important, too. That's why Meta Quest 3 features breakthrough mixed reality that enables a spectrum of experiences. You can watch immersive NBA games courtside or open a portal to another dimension right from the comfort of your living room - all while high-fidelity, full-color Passthrough keeps your physical surroundings in sight with over 10 times more pixels compared to Meta Quest 2.

Assassin's Creed Nexus VR will launch for Meta Quest devices - including Meta Quest 2, Meta Quest 3, and Meta Quest Pro - on November 16, enabling players to leap into a first-person virtual-reality adventure for the first time in the Assassin's Creed franchise. Embodying Assassin's Creed heroes Ezio Auditore, Connor, and Kassandra, players will parkour, climb freely across open maps, and use real-world motions to fight their way through a full-fledged Assassin's Creed adventure set across three different eras.

As an undercover hacker in the modern day, players will work from inside Abstergo to foil a plot to change people's beliefs using ancient technology. Working under Abstergo's cybersecurity chief, Dominika Wilk (played by award-winning actress Morena Baccarin), players will explore newly discovered memories from Renaissance Italy, the American Revolution, and Ancient Greece.

Meta has invested heavily in Augmented Reality (AR) devices, such as its Quest and Quest Pro devices. However, it seems like the company has received mixed feedback from the community on its AR headsets, most notably on the higher end. Meta's Quest Pro device was launched on October 25, 2022. According to The Information, Quest Pro will be manufactured as long as the supplies last at manufacturing facilities, and Meta will not order any new material for it. Additionally, Quest Pro 2, the second-generation Quest Pro, will not be released as the company has canceled its development. This is not to be confused with the regular Quest, which is still in active development.

Meta's upcoming Quest 3 will even beat the Quest Pro with its specifications, targeting lower price points and a wider audience. Quest 3 will feature a higher resolution, depth sensor, and two 4MP cameras instead of the one on Quest Pro. Logically, Quest 3 is the obvious upgrade and will cost less than $1000, unlike Quest Pro, which debuted with a $1500 price tag.

Qualcomm Technologies, Inc. and Meta are working to optimize the execution of Meta's Llama 2 large language models directly on-device - without relying on the sole use of cloud services. The ability to run generative AI models like Llama 2 on devices such as smartphones, PCs, VR/AR headsets, and vehicles allows developers to save on cloud costs, and to provide users with private, more reliable, and personalized experiences.

As a result, Qualcomm Technologies plans to make available on-device Llama 2-based AI implementations to enable the creation of new and exciting AI applications. This will allow customers, partners, and developers to build use cases, such as intelligent virtual assistants, productivity applications, content creation tools, entertainment, and more. These new on-device AI experiences, powered by Snapdragon, can work in areas with no connectivity or even in airplane mode.

Announced today, Ultra Ethernet Consortium (UEC) is bringing together leading companies for industry-wide cooperation to build a complete Ethernet-based communication stack architecture for high-performance networking. Artificial Intelligence (AI) and High-Performance Computing (HPC) workloads are rapidly evolving and require best-in-class functionality, performance, interoperability and total cost of ownership, without sacrificing developer and end-user friendliness. The Ultra Ethernet solution stack will capitalize on Ethernet's ubiquity and flexibility for handling a wide variety of workloads while being scalable and cost-effective.

Ultra Ethernet Consortium is founded by companies with long-standing history and experience in high-performance solutions. Each member is contributing significantly to the broader ecosystem of high-performance in an egalitarian manner. The founding members include AMD, Arista, Broadcom, Cisco, Eviden (an Atos Business), HPE, Intel, Meta and Microsoft, who collectively have decades of networking, AI, cloud and high-performance computing-at-scale deployments.

Mark Zuckerberg just announced the initial version of Threads, an app built by the Instagram team for sharing with text. Whether you're a creator or a casual poster, Threads offers a new, separate space for real-time updates and public conversations. We are working toward making Threads compatible with the open, interoperable social networks that we believe can shape the future of the internet.

Instagram is where billions of people around the world connect over photos and videos. Our vision with Threads is to take what Instagram does best and expand that to text, creating a positive and creative space to express your ideas. Just like on Instagram, with Threads you can follow and connect with friends and creators who share your interests - including the people you follow on Instagram and beyond. And you can use our existing suite of safety and user controls.

Whether you're a seasoned VR gamer or new to the medium, it can be hard to know where to start when exploring the Meta Quest catalog. Luckily, we're combining curation and convenience to make things a little easier. Now you can browse less and play more with Meta Quest+, your new VR subscription service.

For just $7.99 USD per month or $59.99 USD annually (a savings of over 37%), you'll get access to two hand-picked VR titles every month. And when you sign up now through July 31, you'll get your first month for $1 USD. With a combination of VR's biggest hits, hidden gems, and back-catalog classics, this is the most affordable way to grow your library with killer content.

Today, at the "Data Center and AI Technology Premiere," AMD announced the products, strategy and ecosystem partners that will shape the future of computing, highlighting the next phase of data center innovation. AMD was joined on stage with executives from Amazon Web Services (AWS), Citadel, Hugging Face, Meta, Microsoft Azure and PyTorch to showcase the technological partnerships with industry leaders to bring the next generation of high performance CPU and AI accelerator solutions to market.

"Today, we took another significant step forward in our data center strategy as we expanded our 4th Gen EPYC processor family with new leadership solutions for cloud and technical computing workloads and announced new public instances and internal deployments with the largest cloud providers," said AMD Chair and CEO Dr. Lisa Su. "AI is the defining technology shaping the next generation of computing and the largest strategic growth opportunity for AMD. We are laser focused on accelerating the deployment of AMD AI platforms at scale in the data center, led by the launch of our Instinct MI300 accelerators planned for later this year and the growing ecosystem of enterprise-ready AI software optimized for our hardware."

Mark Zuckerberg just announced Meta Quest 3, our next-generation virtual and mixed reality headset, which launches later this year. It features higher resolution, stronger performance, breakthrough Meta Reality technology, and a slimmer, more comfortable form factor. Quest 3 will ship in all countries where Meta Quest is currently supported this fall. The 128 GB headset starts at $499.99 USD, and we'll offer an additional storage option for those who want some extra space. Mark your calendars because we'll have lots more to share at Meta Connect, which returns this year on September 27.

Quest 3 is the supercharged all-in-one headset you've been waiting for—no wires required. Sign up to be the first to learn about Meta Quest 3.

TrendForce forecasts a global downturn in AR and VR device shipments for 2023, predicting a shipment total of roughly 7.45 million units—an 18.2% YoY decrease. VR devices are expected to shoulder the majority of this decline, with projected shipments hovering around 6.67 million units. This dip is primarily attributed to weaker-than-expected sales of newly released high-end devices. Consequently, manufacturers are likely to pivot their sales strategies, shifting their focus to more cost-effective offerings. Conversely, shipments of AR devices are expected to remain stable, with projected shipments exceeding 780,000 units. While Apple's latest offerings could stimulate some demand, the high price tags attached to these units continue to pose a significant barrier to broader market growth.

Two key factors emerge when examining the impending decline in shipments in the VR sector. Firstly, brands may have been overly optimistic regarding the sales of their top-tier products. Despite these premium devices offering enhanced features courtesy of advanced hardware and software, consumers are showing reluctance to shoulder the associated higher costs. Instead, they seem to be gravitating towards more budget-friendly models this year. Secondly, the shortage of appealing, new, cost-effective models in the market is exacerbating the downturn. Meta Quest 2 continues to maintain its status as this year's market-leading VR product as the release of Meta Quest 3 has been pushed back to 2024.

We're back: The Meta Quest Gaming Showcase returns June 1 at 10:00 am PT on Twitch, Facebook, YouTube (plus YouTube in Japan), and in Meta Horizon Worlds.

This is a banner year for VR, and the third annual Meta Quest Gaming Showcase is our biggest celebration of the depth and breadth of content across the Meta Quest Platform yet. We'll have over 40 minutes of content, including a brand-new pre-show of game updates and debut trailers to help you count down before the Showcase kicks into high gear, as well as a post-show developer roundtable for a deep-dive conversation around some upcoming games. And as in years past, you can expect new game announcements, gameplay first-looks, updates to existing games, and more during the main event.

Facebook's parent company, Meta, has announced that revenues generated by advertisement sales have improved fortunes, following on from three quarters of consistent slumps. It has reported an operating profit of $5.7 billion for the first quarter of 2023, this announcement arrives as a surprise to business analysts - their calculations predicted yet another decline in advertising sales for Q1 '23. Mark Zuckerberg - co-founder, executive chairman and CEO of Meta Platforms - has informed his investors that artificial intelligence-assisted systems have directed more user traffic to its social media platforms. Reels and Instagram have experienced the most user population growth, thanks to Meta's AI-driven recommendation system boosting engagement by 24% for the latter platform. The company's leader stated that AI-related operations are set to expand into generative tasking, visual creation tools (for Instagram) and business chatbots.

Meta is continuing to streamline its operations in 2023 - Zuckerberg has previously outlined plans for a year of "efficiency" with extensive plans already underway to reduce company-wide headcounts. 10,000 positions are set to be cut this year, and press coverage from last week revealed that Meta's gaming divisions being hit hard in terms of layoffs. Reports suggest that a third of the team at Ready at Dawn, an Oculus Rift-oriented development studio, were let go throughout that period. The social media and technology let go of 13,000 employees last year due to reduced profits margins. A return to better fortunes has not resulted in an immediate slowdown of headcount reduction - Meta is expected to carry on implementing its 2023 efficiency initiative.

Meta Platforms, Inc. (formerly known as Facebook) has begun implementing widespread staff layoffs across multiple company departments. The cutback operation was announced last month, with the social media giant targeting 10,000 positions (throughout 2023) in an effort to become more efficient. 13,000 staffers were released from their jobs last year, representing 13% of the workforce at the time - advertising revenues had declined in 2022 and Meta said that the change was required in order to navigate economic downturns. A repeat of that sentiment has been issued this year and two internal games development studios have been affected quite heavily by the latest layoff initiative, reports suggest. Ready at Dawn and Downpour Interactive are getting a lot of press coverage - due to former staffers divulging details of Meta's cutbacks via social media.

Thomas Griebel, a (now former) Senior engine programmer at Ready at Dawn, took to Twitter two days ago and made claim that: "One third of the studio was laid off today, including the studio head." He also observes that the studio has been shrinking over time: "Also lost some really great people just due to attrition. Think we're down almost (down to a) half since when I started in August (2022)." Former Ready at Dawn technical designer Colin McInerney has also released a string of information about co-workers being let go. Michael Tsarouhas (senior designer) and Daan van Zelst (level designer) have confirmed that they were released from their roles at Downpour Interactive.

According to The Information, Microsoft has been working on creating custom processors for processing AI with a project codenamed Athena. Based on TSMC's 5 nm process, these chips are designed to accelerate AI workloads and scale to hundreds or even thousands of chips. With the boom of Large Language Models (LLMs) that require billions of parameters, training them requires a rapid increase of computational power to a point where companies purchase hundreds of thousands of GPUs from the likes of NVIDIA. However, creating custom processors is a familiar feat for a company like Microsoft. Hyperscalers like AWS, Google, and Meta are already invested in the creation of processors for AI training, and Microsoft is just joining as well.

While we don't have much information about these processors, we know that Microsoft started the project in 2019, and today these processors are in the hands of select employees of Microsoft and OpenAI that work with AI projects and need computational horsepower. Interestingly, some projections assume that if Microsoft could match NVIDIA's GPU performance, the cost would only be a third of NVIDIA's offerings. However, it is challenging to predict that until more information is provided. Microsoft plans to make these chips more widely available as early as next year; however, there is no specific information on when and how, but Azure cloud customers would be the most logical place to start.

On the heels of a weaker than expected 2022, International Data Corporation (IDC) has lowered its forecast for augmented and virtual reality (AR/VR) headsets in 2023. Global shipments are now expected to reach 10.1 million units this year, according to the International Data Corporation (IDC) Worldwide Quarterly Augmented and Virtual Reality Headset Tracker. Despite the revised outlook, total AR/VR headset shipments are expected to grow 14% in 2023 and accelerate over the 2023-2027 forecast period with a five-year compound annual growth rate (CAGR) of 32.6%.

According to TrendForce's latest survey of the server market, many cloud service providers (CSPs) have begun large-scale investments in the kinds of equipment that support artificial intelligence (AI) technologies. This development is in response to the emergence of new applications such as self-driving cars, artificial intelligence of things (AIoT), and edge computing since 2018. TrendForce estimates that in 2022, AI servers that are equipped with general-purpose GPUs (GPGPUs) accounted for almost 1% of annual global server shipments. Moving into 2023, shipments of AI servers are projected to grow by 8% YoY thanks to ChatBot and similar applications generating demand across AI-related fields. Furthermore, shipments of AI servers are forecasted to increase at a CAGR of 10.8% from 2022 to 2026.

Meta has announced a price cut for its Quest 2 256 GB and Quest Pro VR headsets, reducing the price by $80 and $500, respectively. The latest price cut puts the Meta Quest 2 256 GB at $429 and the Quest Pro at $999.99.

Unfortunately, Meta is still keeping the price of the Quest 2 128 GB VR headset at $399.99, which now puts it in a rather difficult position. Bear in mind that the Meta Quest 2 VR headset does not feature support for microSD cards, so $30 gets you double the storage, making the slightly more expensive model a better deal.

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.

TrendForce estimates that global shipments of VR devices will come to around 8.58 million units for 2022, showing a YoY drop of 5.3%. There are three notable factors behind the decline. First, the ongoing high inflation has been suppressing the consumer demand for end products this year. Second, VR brands have either opted to not release a new product this year or pushed back the schedule for releasing a new product. Lastly, the demand for Meta's Quest devices has been dampened by a significant pricing adjustment. As for 2023, TrendForce forecasts that global shipments of VR devices will bounce back to a total of 10.35 million units and show a YoY growth of 20.6%. New products including the Sony PS VR2 and the Meta Quest 3 are scheduled for release next year, so they are expected to be a significant demand driver.

Meta has been the most aggressive in committing resources into the VR/AR market. However, the effect of its attempt to offer hardware at a low price has been quite disproportionate to its massive investments in related technologies. Due to mounting cost pressure, Meta has adjusted its pricing strategy for Quest devices. The Meta Quest 2, in particular, is now priced at US$1,499, which is more than three times its previous price. On account of this price hike and its relatively short battery life, the Quest Pro will unlikely follow the footsteps of the Quest 2 with respect to maintaining a strong shipment growth momentum. TrendForce estimates that that shipments of the Quest Pro will reach just to the level of 250,000 units for 2022. Meta will have to wait until next year, when the Quest 3 hit the market, to again see a notable positive growth in its shipments of VR devices. TrendForce currently forecasts that Meta's shipments for 2023 will total around 7.25 million units.