Market and Technology Trends

Computing and AI for Data Centers 2022

By Yole Intelligence — Sep 2022

Data center processor diversification is ongoing with AI co-processing and DPU acceleration. Myriad players want a slice of the expected $106B 2027 market.

AI accelerators and SmartNICs/DPUs are pushing data center transformation

The growth of artificial intelligence (AI) is having a strong impact on server processor technology. First, extensions enabling accelerated AI inferences are being added to Central Processing Units (CPUs). Then, the growth of AI is strongly pushing the attachment rate of AI co-processors. The first devices to benefit from this push are Graphics Processing Units (GPUs), which are massively used to train AI technologies. AI Application Specific Integrated Circuit (ASIC) co-processors are also growing, both for inferences and training. In parallel, the rise of networking acceleration with SmartNIC and DPU is happening, mainly in hyperscale datacenters. With the growth of virtualization, ever more CPU cores are dedicated to networking and data management tasks. Adding a networking co-processor such as Smart Network Interface Cards (SmartNICs) and Data Processing Units (DPUs) offloads heavy networking tasks from CPUs. This is the start of a trend called datacenter disaggregation, which is putting these new DPU processors at the heart of data center networks to handle networking tasks, as well as storage and infrastructure management tasks. This push for a new type of processing is joined by a need for ever more servers to support the many growing applications. Together, these trends strongly drive revenue from processors for data centers, which will reach around $106B in 2027, at a Compound Annual Growth Rate (CAGR_21-27) of 22%.

Arm-based processors, advanced packaging and memory innovation are driving the development of new processors

If x86-based server CPUs are still largely dominating the market, the diversity of other products available is growing. Ever more Arm-based solutions are on the market, with products from companies such as Nvidia, Ampere Computing, Amazon Web Services, and Alibaba. Meanwhile, with the decreasing pace of Moore’s law, advanced packaging and new technologies are essential to increase processor performance. This is leading to many innovations, such as Through Silicon Vias (TSVs), chiplets, and 2.5D and 3D packaging. They are used to bring memory closer to the processor with the stacking of High Bandwidth Memory (HBM) on the interposer. In parallel to this phenomenon, many innovations are trying to gather computing and memory in another way. They bring computing inside memory units, with computational storage and processing in-memory solutions for example.

A dynamic ecosystem: large fabless companies, cloud giants and AI start-ups

Three main types of players are developing processors for data centers. Large fabless companies are the first category, with Intel, Nvidia, and AMD owning most of the CPU and GPU market today. Each of these companies is currently consolidating its solution portfolio through internal development and multi-billion acquisition to offer a comprehensive data center offer. Then the cloud companies are playing a growing role, from big processor customers to processor designers. Many of them have started to design their own processors for their internal needs. The third category is startups dedicated to creating AI accelerators. In the last decade a high number have been created and they received significant funding. The Chinese ecosystem is particularly dynamic, pushed by several Chinese policies that aim at stimulating the development of the semiconductor industry, with a specific focus on AI.

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Key Features

Data center application trends and impact on processor market
Market forecast for processor by unit, revenue, and ASP
Technology breakdown: CPU, GPU, AI accelerators and smartNIC/DPU
Market breakdown: Hyperscale, enterprise, HPC
Technology segmentation and associated trends
Technology trends analysis for the main class of processors
Arm-based CPU evolution
GPU and AI accelerator landscape and technology trends
Networking acceleration with smartNIC and DPU, in the context of datacenter disaggregation
Market trends and new application analysis
Ecosystem description from foundries to OEMs
M&A, strategy analysis and competition landscape of key players

What's new

Networking acceleration with SmartNIC and DPU
Breakdown by market segment for hyperscale, enterprise and HPC
Focus on advanced packaging innovation
Focus on memory technologies
Focus on the Chinese ecosystem

Product objectives

Provide a scenario for computing within the dynamics of the datacenter market, and present an understanding of AI’s impact on the semiconductor industry:

Processor - revenue forecast, volume forecast, technology breakdown, market segment breakdown
Focus on artificial intelligence acceleration
Focus on networking acceleration

Deliver an in-depth understanding of the ecosystem and its players:

Who are the competitors? What are the relationships inside this ecosystem?
Who are the key suppliers to watch, and what technologies do they provide?
Start-up funding and M&A
What is happening in China?

Offer key technical insights and analyses into future technology trends and challenges:

Key technology choices and technology dynamics
Advanced packaging and memory technology innovation
Emerging technologies and roadmaps