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2023/01/31
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 69% to the latest projection of 44% With CSPs cutting demand, global server shipments are now estimated to grow by just 187% 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 30% 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
Turning to Microsoft, its server procurement quantity for this year will still register a double-digit growth rate because it has not significantly curbed its demand related to enterprise cloud investments However, the growth rate has been lowered to 134% from the previous projection of 169% TrendForce is not ruling out a further downward correction in the future because the recent wave of corporate downsizing that is felt across many sectors could affect Microsoft’s revenue from SaaS Furthermore, as companies cut spending due to the uncertain economic outlook, Microsoft could see limited growth for its cloud-related revenues (eg, revenues from IaaS and PaaS) On the top of all these, inventory reduction is proceeding at a slower-than-expected pace in the server supply chain Therefore, production has been scaled down for servers that run on the Gen 9 platforms (ie, Intel’s Sapphire Rapids, AMD’s Genoa, and Ampere’s Siryn)
Looking at Google, the projected YoY growth rate of its server procurement quantity for 2023 has been lowered to 52% Google’s server procurement plan could still be affected by two factors First, new servers running on Intel’s Sapphire Rapids or AMD’s Genoa have not met Google’s expectations in terms of total cost of ownership This could lead to a shrinkage of Google’s server demand for 2H23 Second, the slump in the e-commerce market during this post-pandemic period is limiting the growth of Google’s revenue from cloud services Hence, Google could scale down its server deployment plan
Lastly, regarding AWS, its orders for components such as CPUs, connectors, and CCLs have been affected by the recent performance of the wider economy On the whole, AWS has shrunk the scale of its component orders by about 30% from last year Therefore, the YoY growth rate of its server procurement quantity for this year has also been corrected down to 62% Two factors could lead to a further revision to its demand First, most its servers that run on its in-house Graviton CPUs are being used to provide services to its clients in the enterprise market If these clients cut their demand this year, AWS will also make a corresponding adjustment to its demand for Graviton servers Second, AWS originally planned to begin the mass production of servers that run on the Graviton 3 platform in 3Q23, but there are now indications of an immediate migration to the new Graviton 4 platform If AWS has formally decided to replace the models that run on the Graviton 3 with the ones that run on the Graviton 4, then the contribution from the servers with the more advanced platform will arrive too late to be reflected in the server shipment figure for this year
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/01/31
Semiconductors
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As indicated by the survey of global market intelligence firm TrendForce, the persistently high inventory cycles among buyers had resulted in conclusions of server DRAM contracts merely from a minor segment of small-scale buyers
2023/01/31
Semiconductors
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Global market intelligence firm TrendForce reports that DRAM suppliers started to offer quotes for 1Q23 contract prices before the Lunar New Year holiday
2023/01/31
Semiconductors
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Market intelligence firm TrendForce reports that the number of work days for this January is notably lower compared with the same month of the previous years due to the early arrival of the Lunar New Year holiday
2023/01/30
Semiconductors
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As indicated by the survey of global market intelligence firm TrendForce, smartphone brands, having started adjusting their inventory of various components since 2022
