Global server shipments grew by 7.3% sequentially in the second quarter of 2024, surpassing previous forecasts. The main reasons are the initiation of general-purpose server updates by more large US cloud service providers and the continuous increase in procurement and shipments of high-end AI servers by cloud service providers and brand vendors, according to DIGITIMES Research's latest server report covering the second quarter and second half of 2024.
The report's figures also show that global server shipments will likely grow by 1.6% sequentially in the third quarter, with the main contribution still coming from large cloud service providers.
The four major North American cloud service providers will all see shipment growth, and the demand recovery seen in Chinese cloud service providers in the second quarter will likely continue into the third quarter. However, brand vendors may see shipment declines compared to the previous quarter.
Due to the high base established in the previous two quarters and increased economic uncertainty, a slight decline compared to the prior quarter is expected in the fourth quarter of 2024. Full-year server shipments in 2024 will likely reach around 14.73 million units, a 2% increase from 2023.
There was a significant recovery in overall server shipments in the second quarter of 2024. Large US cloud service providers, including Meta and Microsoft, initiated general-purpose server replacements, and AI server procurement by companies like Meta and Amazon remained in an expansion phase, leading to a 10.4% increase in procurement by these cloud service providers.
After being struck by lockdowns during the COVID-19 pandemic and remaining dormant for several years, Chinese cloud services providers experienced a rebound, with shipments increasing by 11% quarter-on-quarter. Meanwhile, the shipment performance of brand vendors matched previous expectations, with a 4.8% quarter-on-quarter increase, mainly due to faster updates of general-purpose servers by enterprise customers and improved AI server supply conditions.
In the third quarter of 2024, Google will likely launch another round of updates for its general-purpose servers. Additionally, Amazon's procurement of its Graviton processors and AI ASICs is expected to improve compared to the previous quarter, potentially driving a 6.1% quarter-on-quarter increase in procurement by large American cloud service providers.
However, due to an already high shipment base and ongoing economic uncertainty among enterprise customers, brand vendors are likely to see a decline in overall shipments.
Nevertheless, the strong performance expected from large cloud service providers in the third quarter will favor Taiwan-based server makers like Wiwynn and Quanta Computer, which focus on large cloud customers.
