Demand for generative AI services is skyrocketing and driving the need for AI servers and machines that are substantially different from traditional servers. The category is growing so quickly that sales of AI servers are set to reach $150 billion in 2027, according to Liu Yangwei, the chairman of Foxconn, the world's largest electronics manufacturing service (EMS) provider.

AI servers are a relatively new category of data center-grade products that use compute GPUs or specialized processors equipped with fast memory, so they tend to be considerably more expensive than traditional servers for data center and enterprise workloads. Demand for various generative AI applications is driving demand for such machines so rapidly that the AI server market will grow from $30 billion in 2023 to a staggering $150 billion by 2027, said Liu Yangwei at the earnings call with analysts and investors this week, reports Commercial Times.

To put the $150 billion number into context, the total server market value reached $123 billion in 2022 and is poised to grow to $186 billion in 2027, according to IDC. If estimates by the Foxconn chairman turn out to be correct, then the market of AI servers will be comparable to the market of traditional servers in four years. This fourfold increase in just four years underscores the explosive demand and the vast opportunities it presents for industry players, including Foxconn.

Foxconn identified cloud service providers (CSPs) as the main clients for AI servers. Cloud giants like Amazon Web Services, Google, and Microsoft Azure continuously seek advanced server solutions to enhance their service offerings and cater to the growing AI needs of their customers. While branded server makers contribute to the demand, CSPs remain the dominant force driving the growth of the AI server market.

The chairman of Foxconn revealed that the company holds over 70% of the market share in the AI server industry's front-end GPU modules and boards and that it has long-standing relationships with North American CSPs. Since Foxconn has production facilities in the U.S., including the well-known factory in Wisconsin, it can offer localized services to customers like AWS, Google, and Microsoft, a distinct competitive advantage. 

Source: Commercial Times (via Dan Nystedt)

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  • Threska - Thursday, August 17, 2023 - link

    Tesla and Dojo.
  • Diogene7 - Thursday, August 17, 2023 - link

    For sure, AI in many forms seems likely a big growth driver for at least the period let say 2025 - 2030…

    For AI datacenters, would someone get an idea about how much of that growth is for AI training servers (to train the AI models) and how much is for the AI inferencing servers (to apply the learned model) ?

    Is it for example, 80% of AI training servers and 20% AI inferencing servers ? I am completely clueless about the numbers here…

    Also, another issue emerging from this is cost (as of 2023, it seems Nvidia GPU cards for AI training servers could cost 30 000$ / 40 000$) and exponential rise in power consumption allocated to those AI servers : this will create huge incentive / opportunities to find more power and cost efficient solutions / paradigm…

    The current way of doing this is likely vastly energy inefficient and I am a firm believer that spintronics and/or Non-Volatile Memory like MRAM (maybe taking advantage of the stochastics effects, and/or Non-Volatile High Bandwith Memory (HBM) MRAM) used in a different paradigm/way may be much better suited for AI and may enable 100x / 1000x (or much more) energy efficiency / cost improvement…
  • Threska - Thursday, August 17, 2023 - link

    More efficient training of AI models rather than pie in the sky hardware.
  • e_sandrs - Friday, August 18, 2023 - link

    Wow: "Since Foxconn has production facilities in the U.S., including the well-known factory in Wisconsin"?

    ICYMI: Those production facilities pretty much never happened.

    "...its unclear what is being manufactured at the site.

    The facility has changed from a Generation 10.5 to a Generation 6 which normally makes screens for phones, tablets and TVs. But so far, no screens have been made.

    The job goal number is also down from 13,000 statewide to 1,454.

    The capital investment has also gone down from $10 billion to $672.8 million."

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