China's clouds slow server buying – US clouds and Facebook may, too
Hyperscalers have ordered more than they need, and the ripples are nasty
The world's server market will grow in 2022 – but more slowly than in the past – and could dip further, according to analyst firm TrendForce.
Supply chain issues are, unsurprisingly, one reason for predicted modest growth. Shanghai's COVID lockdowns, for example, mean China's server makers have struggled to open, and get the parts they need.
The likes of Dell and HPE were hurt by those lockdowns, but TrendForce feels they'll recover.
IT capital investment is likely to slow
But difficulties buying kit will make other ripples. TrendForce's observations and data suggest the big four US-based server buyers – AWS, Azure, Google and Facebook – "have increased their orders and raised their material inventories as a bulwark against shortages causing an inability to ship whole devices." But those big orders factored in possible non-delivery due to supply chain worries, creating "a surplus of orders in the server market."
US-based hyperscalers may yet adjust their orders, TrendForce believes, which could see server shipments fall overall.
Chinese clouds, meanwhile, mostly stopped growing.
"Baidu, Alibaba, and Tencent have all lowered their procurement scale this year, with Tencent downgrading its purchasing in the most obvious fashion," TrendForce suggests, adding that the three will "be more reserved in terms of future cloud construction." Beijing's crackdowns on internet companies and energy efficiency requirements are two reasons for the three clouds' smaller orders.
ByteDance will buck that trend, as the TikTok developer is creating new businesses that will see it maintain an annual server purchase growth rate of nearly 70 percent in 2022. Chinese carriers are also increasing their orders, as are provincial governments.
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Overall, TrendForce sees server sales growing by five percent in 2022, with 6.5 percent growth likely in Q3. In this economy, that growth is welcome in any industry.
But come Q4 sales will dip 5.7 percent year on year, and TrendForce feels that in 2023 the market will cool further.
"IT capital investment is likely to slow and growth will not be as strong as in the past two years," the analyst group suggests. ®
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- Semiconductor Manufacturing International Corporation
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