Early AI Deployments Contribute to Data Center Physical Infrastructure Market in 3Q 2023, According to Dell'Oro Group

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Dec 08, 2023, 08:00 ET

Vertiv Scores Second Straight Quarter as Market Leader

REDWOOD CITY, Calif., Dec. 8, 2023 /PRNewswire/ -- According to a recently published report from Dell'Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, 3Q 2023 marks the fifth sequential quarter of double-digit year-over-year (Y/Y) growth for the Data Center Physical Infrastructure (DCPI) market, that has historically grown at mid-single digit rates for the past decade. Growth from pandemic induced orders is waning, but early AI deployments are materializing as a new driver of revenue growth. Some vendors have secured orders for equipment optimized for large scale AI workloads, which are more than offsetting the decline in pandemic-related orders, and backlogs are rising.

"The generative AI infrastructure story began with the NVDIA H100 in 1Q 2023, which has remained the industry barometer for AI adoption. End-users have utilized significant resources to obtain initial shipments of the costly and supply constrained GPU," said Lucas Beran, Research Director at Dell'Oro Group. Due to the effort required here, many end-users are only able to address the power and thermal management infrastructure requirements after or close to receiving those initial GPU shipments.

"Without a doubt, these AI related power and cooling investments started contributing to market growth in 3Q 2023. This was particularly prominent for rack power distribution units, where customized products with higher power ratings were notable. The next few quarters will increasingly emphasize the transition in DCPI market drivers, from broad based pandemic induced digitalization and supply chain constraints, to large scale, purpose-built AI facilities," Beran added.

Additional highlights from the 3Q 2023 Data Center Physical Infrastructure Quarterly Report:

Vertiv continued to outpace market growth and gained over 2 percentage points of market share in 3Q 2023.
North America, Asia Pacific (excluding China), Europe, and the Middle East and Africa (EMEA) were the fastest-growing regions in 3Q 2023, maintaining double-digit growth rates. Caribbean and Latin American (CALA) revenues grew at a high single-digit rate, while the China market was the only region to decline.
Product growth was broad-based, but Thermal Management and Power Distribution grew at the fastest rates.
Looking ahead, we forecast worldwide DCPI market growth to moderate in 2024 as pandemic induced orders are filled. However, we predict the market growth rates will remain at higher than historic levels, as AI deployments increasingly materialize throughout the year.

About the Report
Dell'Oro Group's Data Center Physical Infrastructure quarterly report provides a complete overview of the Data Center Physical Infrastructure market. This covers market sizes and forecasts for uninterruptible power supplies (UPS), thermal management, cabinet power distribution and busway, rack power distribution, IT racks and containment, and software and services. Allocation of manufacturing revenues by cloud service providers, telco, colocation, and enterprise customer segments is also provided. The report also shares insights into market trends, future outlook, and competitive landscape. For more information about the report, please contact us at [email protected].

About Dell'Oro Group
Dell'Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks and data center infrastructure markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell'Oro Group at +1.650.622.9400 or visit www.delloro.com.

SOURCE Dell'Oro Group