Gadget

AI data centre chip market set to explode

From a 2024 value of $38-billion, the total market of processors and accelerators for AI applications in data centres is expected to rocket to $138-billion by 2028.

This represents 30% annual growth for the sector over the next 5 years, according to a Futurum Intelligence AI chipset market analysts and study released last week. Focused on the industry’s $400-billion global data center market, the study analysed the server segment where AI processing takes place, estimating this segment will be one of the fastest growing and the use of AI applications one of the largest.

Global data centre investments have seen new growth drivers in the market for AI inferencing chips, which allow AI algorithms to process data at the edge of a network regardless of whether it is connected to the Internet. This market is set to grow significantly this year as generative AI models mature, and chipmakers focus on inferencing support.

The significant study encompasses eighteen different chips vendors and determines their respective market share positions across the four primary product categories, GPUs, CPUs, XPUs (dedicated accelerators used in AI apps like Intel Gaudi, IBM Telum, Groq LPU, etc.) and Custom Cloud Accelerators such as Google TPU, AWS Trainium & Inferentia, Microsoft Maia.

The semiconductor sector in the market accounts for ~30% of the S&P Index’s weight and its market cap reaches over $5T. The sector’s current YTD return in the market exceeds 66% while the S&P returned 16% YTD. Similar to its strong market performance, the study finds Nvidia has held 92% of the market share for GPUs in early 2024. The GPU market accounted for 74% of chipsets used in AI applications within data centers and is forecasted to grow by 30% CAGR over the next 5 years, reaching $102B by 2028, from $28B in 2023.

According to the study’s findings, Hyperscale Cloud Providers such as Google, AWS, Oracle, Microsoft and others drove 43% of the purchase decisions going into 2024 and are forecasted to be the leading buyers of AI processors and accelerators, growing to 50% by 2028. The market’s cloud segment indicated a 58% market share held by Google and a 21% market share by AWS, forecasted to grow by 35% CAGR up to $6B in 2028.

Processors and accelerators for AI excluded in the study were data center processing not available for public use. e.g. AI chipsets designed for and used by Meta, Tesla, Apple, etc.

“We are witnessing the most profound technological revolution with the advent of AI and its supporting semiconductors solutions,” said Daniel Newman, CEO of The Futurum Group. “As AI innovation evolves, companies like NVIDIA, AMD and Arm are seeing significant revenue growth, but the market’s competitive landscape is expected to intensify with new entrants and startups poised to capture market shares and drive continued innovation. For that reason, I am very proud to continue and bring insightful and actionable intelligence to the market in a most substantive and timely manner,” he added.

Here are key highlights from the study:

The complete study includes detailed revenue and growth by product type through 2028, deployment type by year, 11 use cases sized by year and 17 vertical markets sized by year.

View report here.

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