Server Microprocessor Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The server microprocessor market is expected to register a CAGR of 2.1% over the forecast period. They are increasing their data center footprint, and demand from cloud service providers prompts the growth of the server microprocessor market. Dominated by the duopoly of Intel and AMD, the market for server microprocessors is undergoing product innovations. Companies realize the performance needs for modern workloads such as data analytics, machine learning, and artificial intelligence and are improving their designs accordingly.

Key Highlights

• The server microprocessors are bound to rapid technological change, which results in challenging quality adjustments for the companies. Some of the significant characteristics for measuring the quality of microprocessors include cores, threads, base frequency, turbo frequency, cache size, and thermal design power. Power consumption and performance are expected to remain the focus for microprocessors over the forecast period.
• According to the Consumer Technology Association (CTA), retail sales revenue for the consumer technology industry in the United States was forecasted to reach a record-breaking USD 487 billion in the previous year - a 7.5% increase compared to the previous years. A similar trend has been observed in other countries as well. The rapidly expanding demand for smartphones, tablets, and other smart home devices is among the major factors driving the demand for microprocessors, as microprocessors optimize the performance of these devices by improving speed and efficiency.
• Apart from this, the increasing penetration of smart home products also drives the demand for microprocessors. Devices like smart locks, fire and smoke alarm systems, smart speakers, etc. are increasingly taking their place in people's lives. Coupled with the increasing spending capacity of the middle class, especially across developing countries such as India and Brazil, this is expected to support further market growth.
• The growth of big data analytics and cloud computing, as well as the expansion of mobile broadband, drive the demand for new data center infrastructures.According to Cloudscene, North America alone (US and Canada) houses around 3029 data centers as of this year, making it a prominent market for server microprocessors.
• Furthermore, the rapid rise of the Internet of Things is one significant reason for promoting microprocessor usage (IoT). IoT technologies enable microprocessors because it is now technically and economically feasible to collect data from a far wider range of things than was previously conceivable. Companies frequently misjudge the complexity and volume of data generated by IoT products and platforms, necessitating the deployment of solutions to help them manage and interpret all of the data they are now collecting.
• The global outbreak of COVID-19 had a mixed impact on the worldwide microprocessor market. While the widespread lockdown across various countries significantly disrupted microprocessor manufacturers' supply chains and manufacturing capabilities, the demand for these semiconductor devices increased substantially across the healthcare and consumer electronics sectors.
  The server microprocessor market is expected to register a CAGR of 2.1% over the forecast period. They are increasing their data center footprint, and demand from cloud service providers prompts the growth of the server microprocessor market. Dominated by the duopoly of Intel and AMD, the market for server microprocessors is undergoing product innovations. Companies realize the performance needs for modern workloads such as data analytics, machine learning, and artificial intelligence and are improving their designs accordingly.
  

  Key Highlights

  • The server microprocessors are bound to rapid technological change, which results in challenging quality adjustments for the companies. Some of the significant characteristics for measuring the quality of microprocessors include cores, threads, base frequency, turbo frequency, cache size, and thermal design power. Over the next few years, microprocessors will likely continue to focus on how much power they use and how well they work.
  • According to the Consumer Technology Association (CTA), retail sales revenue for the consumer technology industry in the United States was forecasted to reach a record-breaking USD 487 billion in the previous year - a 7.5% increase compared to the previous years. A similar trend has been observed in other countries as well. The rapidly expanding demand for smartphones, tablets, and other smart home devices is among the major factors driving the demand for microprocessors, as microprocessors optimize the performance of these devices by improving speed and efficiency.
  • Apart from this, the increasing penetration of smart home products also drives the demand for microprocessors. Devices like smart locks, fire and smoke alarm systems, smart speakers, etc. are increasingly taking their place in people's lives. Coupled with the increasing spending capacity of the middle class, especially across developing countries such as India and Brazil, this is expected to support further market growth.
  • The growth of big data analytics and cloud computing, as well as the expansion of mobile broadband, drive the demand for new data center infrastructures.According to Cloudscene, North America alone (US and Canada) houses around 3029 data centers as of this year, making it a prominent market for server microprocessors.
  • Furthermore, the rapid rise of the Internet of Things is one significant reason for promoting microprocessor usage (IoT). IoT technologies enable microprocessors because it is now technically and economically feasible to collect data from a far wider range of things than was previously conceivable. Companies frequently misjudge the complexity and volume of data generated by IoT products and platforms, necessitating the deployment of solutions to help them manage and interpret all of the data they are now collecting.
  • The global outbreak of COVID-19 had a mixed impact on the worldwide microprocessor market. While the widespread lockdown across various countries significantly disrupted microprocessor manufacturers' supply chains and manufacturing capabilities, the demand for these semiconductor devices increased substantially across the healthcare and consumer electronics sectors.

Server Microprocessor Market Trends

Consumer electronics Segment is Expected to Drive the Market Demand

• Microprocessors are increasingly being used in consumer electronics applications, such as desktop PCs, smartphones, tablets, and servers, because of their fast processing speed, small size, and ease of maintenance. This multipurpose electronic processing device may be configured to accomplish 3 billion activities per second, transport data swiftly between memory regions, and conduct sophisticated mathematical calculations, such as floating-point operations. The rising consumer electronic segment will favor the microprocessor market, contributing to market growth and progress for the market under consideration.
• Operators around the Asia-Pacific are leveraging the scale and utility of mobile networks and services to help large and small businesses implement new digital solutions to meet Industry 4.0 goals, in which 5G and the IoT will play significant roles. According to the GSMA’s Mobile Economy Report of the last year, the second phase of 5G network rollouts has commenced in the area, marked by several 5G-related activities in India, Indonesia, and Malaysia. The region’s expanding 5G network capabilities will enhance the smartphone, tablet, TV, AR/VR, and other consumer electronics markets, thus boosting the researched market in the region.
• The widespread use of smart homes in industrialized economies, including the United States, Canada, Spain, Germany, and France, will expedite the adoption of intelligent home technology goods, hence advancing the industry. According to a Consumer Technology Association news release from July last year, over 100 million smart home gadgets were supplied in the United States, accounting for USD 15 billion in sales. In the last year, smart home technologies, such as house robots and smart speakers, have been widely used in the United States. These gadgets are heavily embedded with microprocessors, propelling market prospects during the anticipated period.
• The analog AI processor company Mythic launched its M1076 Analog Matrix Processor today to provide low-power AI processing. The company uses analog circuits rather than digital to create its processor, making it easier to integrate memory into the processor and operate its device with ten times less power than a typical system-on-chip or graphics processing unit (GPU).
• Supermicro, Inc., a total IT solution provider, announced the launch of the industry's most comprehensive portfolio of servers and storage systems based on the upcoming 4th generation Intel Xeon Scalable processor in November of this year.

Asia-Pacific Making Efforts to Develop Key Competence in Microprocessors

• The Asia-Pacific region is among the fastest-growing regions and is even outpacing developed regions, such as North America and Europe, in terms of growth rate across various sectors. For instance, the automotive industry, where the demand for microprocessors has been increasing significantly, has witnessed the highest growth rate in the Asia-Pacific region.
• According to OICA, China was the leading producer of motor vehicles last year, with about 26 million vehicles. Japan and India were in the third and fourth spots, with 7.84 million and 4.39 million vehicles produced, respectively.
• With the automotive industry fast moving toward autonomous vehicles, the demand for microprocessors is expected to grow further in the Asia-Pacific region. In July of this year, for example, Baidu, a major automaker in China, showed off the self-driving taxi RT6.
• Furthermore, the consumer electronics industry in the Asia-Pacific region is also witnessing an upward trend, with demand touching record heights every year due to factors such as fast digitalization and increased penetration of high-tech gadgets. During the projection period, the regional market is expected to be driven by increased use of the Internet of Things (IoT), large IT investments by the government, and rising demand for cloud-based services.
• According to IBEF, the value of consumer electronics production in India was INR 705.15 billion last year. Furthermore, the number of connected wearable devices in the Asia-Pacific region is also expected to significantly increase from 258.2 million in 2021 to 311 million in the current year. (Source: Cisco Systems). Such trends are expected to drive the growth of the market studied in the Asia-Pacific region during the forecast period.

Server Microprocessor Market Competitor Analysis

The server microprocessor market has been dominated by Intel for the past few years, with AMD as the closest competitor and other players like SK Hynix Inc. and Nvidia Corporation, among others. The market demands strong investments in R&D and technology partnerships to address the needs of servers and data centers. AMD will likely cut through a small share of Intel in the server microprocessor market, considering the new product rollouts and competitive pricing strategy. Vendors in the market have been involved in the launch of new microprocessors for next-generation data centers. Following are the recent developments in the market:

• November 2022 - AMD announced the launch of Epyc server processors for cloud providers, enterprises, and organizations that require high-performance computing. The fourth generation of AMD Epyc processors could help businesses free up data center resources to handle more work and speed up output.
• April 2022 - Microsoft has launched its new Azure virtual machines powered by the Arm-based Ampere Altra server processors. It is made to run scale-out workloads, web servers, application servers, open-source databases, cloud-native and rich.NET and Java applications, gaming servers, media servers, and open-source databases in an efficient way.

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