Server Microprocessor Market is forecast to reach $18.1 billion by 2026, growing at a CAGR 2.4% from 2021 to 2026. Server microprocessor includes more powerful processors as compared to the desktop computer. Even server microprocessors support multiple cores, multiple threads and multiple processors, to sustain its performance level. Server microprocessors and Integrated Circuits have an immense storage space and the ability to insert several disks into them.
Growing data center footprint and demand from cloud service providers are driving the growth of the server microprocessor market. Companies are addressing the performance demands of modern workloads such as data analytics, Machine check architecture, cache memory Artificial Intelligence and are refining their designs accordingly.
The expansion of mobile broadband, the rise of big data analytics and cloud computing are driving the demand for new data center infrastructures. As of 2019, according to CNNIC, the US owns almost 45 per cent of the global cloud and internet data centers. North America alone (US and Canada) has about 3254 data centers as of 2019, making it a major market for server microprocessors.
Server Microprocessor Market Segment Analysis – By Architecture
The ARM segment is expected to grow at a higher CAGR of 3.1% during the forecast period. The ARM machine check architecture is easy to handle, has a simple design and is powerfully effective. Due to its energy-efficient nature, the architecture is most compatible with low-power built-in and portable devices such as smartphones and notebooks.
Recent advances in the architectural design of ARM have made these offering high-performance computing capabilities comparable to those offered by x86 architecture-based processors and integrated circuits. ARM allows its ISA to be licensed to any business that chooses to pay licensing costs and gives them the advantage of either developing their cores from scratch or using the predefined IP blocks offered by ARM. This facilitates the use of arm-based architecture in a broader range of products across industries.
Server Microprocessor Market Segment Analysis – By Application
The Server and Data Center segment is projected to dominate the server microprocessor market with a share of 51% in 2020. The rising spending by cloud service providers and communications service providers is set to drive the market despite decline in demand from OEMs in recent years. Covid-19 has particularly exacerbated the spending gulf between the cloud service providers and OEMs as there has been an increased shift towards capturing the cloud service provider market. New processor designs from Intel and AMD in particular have been the major drivers of technological adoption in the server and data center market.
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Server Microprocessor Market Segment Analysis – By Geography
Europe is expected to dominate the global Server Microprocessor market with a share of more than 31.2% in 2020. It is estimated that Europe will provide significant scope for servers powered by microprocessors as compute-intensive applications and cloud adoption are increasing. Cloud computing is one of the strategic digital technologies promoted by the European Union to increase productivity and improve business services. These initiatives create a significant demand for data centers in the region, thereby driving the market.
In December 2018, the European Commission announced the selection of the Consortium European Processor Initiative (EPI). The goal of the initiative is to “develop, co-design, and introduce a low-power microprocessor and Integrated Circuits to the European market” enabling Europe to retain a significant part of this technology.
Server Microprocessor Market Drivers
Increase in Number of Data Centers
Over the last decade, Internet penetration has grown dramatically globally, leading to a rise in the number of data centers where server microprocessors are used. The growth in user-based online services such as Facebook, YouTube, Twitter and cloud computing has increased the demand for data centers. These centers store personal data in a centralized system that uses large-scale servers that contribute to market growth.
Open Instruction Set Architecture (ISA) to Gain Traction Amid US-China Trade War
The trade war between China and the United States could have a certain impact on the market. This is considered by US companies (Intel) as well as ARM, which have pledged to cut off Huawei’s access to critical semiconductor components, such as SoCs and CPUs. This may result in increased dependence on open-source Instruction Set Architecture (ISA) such as MIPS, RISC-V, etc. For example, in July 2019, the Alibaba Group unveiled its first self-designed microprocessor, a key step in China’s efforts to promote chip self-sufficiency.
The launch has prompted China’s technology giants to address trade clashes with the US (over access to technology). Huawei is also seeking US independence from their processors. While the company obtained a license for the architecture of ARMv8, it claimed that it would avoid using RISC-V in the future if the restrictions of the US government continued.
Server Microprocessor Market Challenges
High Cost
The high costs involved is the key factor that restricts the growth of the server microprocessor market. The faster the speed of the processor is higher is the cost involved. Factors such as high manufacturing costs for integrated microprocessor and integrated circuits, circuit design costs, rising sales of low-priced mobile devices, decreasing shipment of individual computers, and high raw material prices are expected to impede market growth over the forecast years. In addition, high capital investment, lack of skilled workers and sophisticated user design are some of the other factors expected to constrain the growth of the global microprocessor server market during the forecast period.
Server Microprocessor Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in Server Microprocessor Market. Server Microprocessor Market is expected to be dominated by major companies such as Advanced Micro Devices (AMD), Inc., Baikal Electronics, OJSC, Hisilicon Technologies Co., Ltd., IBM Corporation, Intel Corporation, Mediatek Inc., NVIDIA Corporation, Qualcomm Technologies, Inc., Texas Instruments Incorporated, Toshiba Corporation, Others.
Acquisitions/Technology Launches
In April 2020, Intel announced the launch of its 10th generation Core H series mobile processors. The new processors feature 8 cores and 16 threads, delivering performance with up to 5.3 GHz turbo. The processors also benefit from Intel’s Turbo Boost Max Technology 3.0, Adaptix Dynamic Tuning Technology, Integrated Wi-Fi AX201, and support for Thunderbolt 3 and Intel Optane memory, to offer immersive gameplay, high responsiveness, and intelligent performance tuning.
In June 2019, Marvell (Cavium’s parent company) announced a wider strategic alliance with Arm to accelerate the design and production of the next generation Marvell ThunderX server processor technology. With this new deal, Arm will support Marvell’s R&D in the field of server processor technology for at least three more years (until 2022). With this partnership, Marvell aims to expand its Arm-based server roadmap to enable the next generation of cloud and data center infrastructure.
Key Takeaways
The expansion of mobile broadband, the rise of big data analytics and cloud computing drive demand for new data center infrastructures. As of 2019, according to CNNIC, the US owns almost 45 percent of the global cloud and internet data centers. North America alone (US and Canada) has about 2854 data centers as of 2019, making it a leading market for server microprocessors.
The ARM segment is expected to rise at a higher CAGR rate over the forecast period. The ARM architecture is easy to manage, has a simple design and is powerfully effective.
Europe is expected to dominate the global market for server microprocessors during the forecast period. It is expected that Europe will have substantial scope for servers powered by microprocessors, as computer-intensive applications and cloud adoption are growing.
Huawei is seeking US independence for its processors. While the company obtained a license for ARMv8 architecture, it claimed that it would avoid using RISC-V in the future if the restrictions of the US government continued.
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