The shipment performances of server manufacturers for 2021 have mainly been driven by applications in the post-pandemic new normal, including data center build-outs by major CSPs, accelerated cloud migration efforts by various enterprises, roadside server infrastructures for self-driving cars, and industry 4.0 technologies, according to TrendForce’s latest investigations. However, TrendForce is revising its forecasted QoQ growth of global server shipment for 2Q21 from 19.6% down to 17.7%, as the integration of new Intel and AMD CPU platforms into branded servers has been slightly slowed down, and certain infrastructure projects in China have been deferred. TrendForce expects these unfulfilled server orders to be fulfilled in 2H21, thus driving up global server shipment for the upcoming quarters.
TrendForce previously indicated that the inventory gaps in the server supply chain remained unresolved as lead times for certain key components were also extended. However, smartphone brands have been scaling back their device production in response to the impact of the latest wave of COVID-19 outbreaks in India, so the demand reduction on their part will free up foundry capacity for components used in other end products. TrendForce therefore expects that the supply of key components for servers will loosen and return to the level that will meet the demand from most production lines in 2Q21. Hence, the issue of inventory gaps will eventually be resolved.
Upcoming mass production of new CPU platforms from Intel and AMD means CSPs will not cut back on server procurement in 3Q21
With regards to North American CSPs, the server procurement activities of GCP, AWS, Azure, and Facebook have been stronger in 1H21 compared to the same period last year, with GCP and AWS in particular showing the strongest upside demand for servers. TrendForce expects North American CSPs to further expand their procurement in 3Q21 as server demand will be propped up by the mass production and shipments of server CPUs based on the new processor platforms from Intel and AMD.
In China, the four major domestic CSPs known as BBAT (i.e., Baidu, ByteDance, Alibaba, and Tencent) have been mainly focusing on expanding operations within the home country during 1H21. They have yet to implement plans for significant overseas expansions. Moreover, the Chinese server market was affected by the Lunar New Year holiday. Consequently, China’s server demand has been relatively weak. TrendForce believes that Tencent and Baidu will account for much of the country’s server demand in 2021. Tencent is expanding its collocation business in order to meet the demand from tier-2 CSPs, while Baidu is deploying more servers as part of its efforts to build the infrastructure for self-driving cars (e.g., the installation of roadside units).
Server DRAM procurement will not lose momentum, while a price hike will likely take place again in 3Q21
DRAM suppliers have shifted more of their production capacity to server DRAM due to rising demand, but the supply fulfillment rate for server DRAM orders is noticeably below 100%. TrendForce therefore expects server DRAM prices to increase by an estimated 3-8% QoQ in 3Q21. With respect to the enterprise SSD market, demand will likely skyrocket in the second half of this year due to an expected spike in shipment of servers deployed in data centers as Intel and AMD ramp up shipments of server CPUs based on their respective new processor platforms in 3Q21. Furthermore, orders for notebook (laptop) computers remain brisk, and the overall NAND Flash supply will get tighter in 3Q21 due to the arrival of the peak production season for consumer electronics. Taking these factors into account, TrendForce projects that contract prices of enterprise SSDs will rise by nearly 10% for 3Q21.
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