ARM-based Server Penetration Rate to Reach 22% by 2025 with Cloud Data Centers Leading the Way, Says TrendForce

[AleksandarK]

According to TrendForce research, corporate demand for digital transformation including artificial intelligence and high-performance computing has accelerated in recent years, which has led to increasing adoption of cloud computing. In order to improve service flexibility, the world's major cloud service providers have gradually introduced ARM-based servers. The penetration rate of ARM architecture in data center servers is expected to reach 22% by 2025.

In the past few years, ARM architecture processors have matured in the fields of mobile terminals and Internet of Things but progress in the server field has been relatively slow. However, companies have diversified cloud workloads in recent years and the market has begun to pay attention to the benefits ARM architecture processing can provide to data centers. TrendForce believes that ARM-based processors have three major advantages. First, they can support diverse and rapidly changing workloads and are more scalability and cost-effective. Second, ARM-based processors provide higher customization for different niche markets with a more flexible ecosystem. Third, physical footprint is relatively small which meets the needs of today's micro data centers.



Influenced by geopolitics and the strengthening of data sovereignty in various countries, major cloud service providers and telecom operators are actively developing micro data centers which will further drive the penetration of ARM-based processors. At the same time, from the perspective of cloud service providers currently adopting ARM-based processors, Graviton, led by AWS, has the largest market scale and began encroaching gradually into the market in 2021. TrendForce also observed that AWS's deployment of ARM-based processors in 2021 reached 15% of overall server deployment and will exceed 20% in 2022. This forces other major cloud service providers to keep up by initiating their own projects at various foundries. If testing is successful, these projects are expected to start mass introduction in 2025.

In addition, according to the Neoverse Platform plan previously released by ARM, its Platform Roadmap will also be one of the key drivers of penetration. This product line is set up to target ultra-large-scale data centers and edge computing infrastructure. However, it is worth mentioning, since x86 is still mainstream in the market and ARM-based server CPU suppliers only maintain small-batch production orders at this stage and primarily focus on ultra-large-scale data centers, introduction of ARM-based servers into enterprise data centers will be slow going. Thus, TrendForce believes that it will still be difficult for ARM-based servers to compete with x86-based servers before 2025.

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[DeathtoGnomes]

are always going to see speculation by TrendForce? any other sources with the same news?

 

[cvaldes]

are always going to see speculation by TrendForce?

Basically yes. They're a market research firm. People pay money to read their research which hopefully gives them insight to where the market is headed. No one has a crystal ball so a lot of this speculation is based on what has historically happened and how things are trending.

any other sources with the same news?

There are many market research firms.

The sources to pay attention to most closely would be the chip designers and foundries. Like market research firms, they are also guessing about the future but with direct familiarity with market demand. So if a company like Nvidia shows enormous QoQ and YoY growth in this segment, their earnings will reflect this. Most importantly is guidance, what is typically labelled as forward-looking statements. It's in a publicly owned company's interest to have a fairly accurate grasp on market demands and trends.

We've witnessed time and time again what happens when supply and demand aren't in balance. For readers of this site, the most obvious and recent one is the great GPU dearth that started around November 2020.

But this isn't specific to semiconductors or even electronics in general. It affects pretty much any commodity:

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particularly in a free market economy.

Presumably Amazon has a clue how cloud computing will develop in the upcoming months and years so they are forecasting increased need for their homegrown Graviton Arm silicon.

In the same way, Apple has a pretty good idea of how many iPhones they will sell so they forecast component supply based on those projections, whether it be smartphone screen, a Broadcom telecommunications chip, or their own homegrown A-series silicon.

Remember that people who run cloud computing datacenters don't just wake up one day and say, "Hey, let's go buy some server CPUs." They forecast this out for months, even years. If you lease some land, build a datacenter on it, you'll probably know what it'll be used for, at least initially. The lead time for these cloud systems are months. You don't just drive to Best Buy and pick a couple of boxes off a shelf.

 

[DeathtoGnomes]

Basically yes. They're a market research firm. People pay money to read their research which hopefully gives them insight to where the market is headed. No one has a crystal ball so a lot of this speculation is based on what has historically happened and how things are trending.


There are many market research firms.

The sources to pay attention to most closely would be the chip designers and foundries. Like market research firms, they are also guessing about the future but with direct familiarity with market demand. So if a company like Nvidia shows enormous QoQ and YoY growth in this segment, their earnings will reflect this. Most importantly is guidance, what is typically labelled as forward-looking statements.

Thanks, but I meant about using them here on TPU for news/front page, using only TrendForce limits the spectrum of whats available.

We cant have it to appear as favoritism, what will fanbois say?

EDIT: yea I should have been more clear the first time.

 

[cvaldes]

Thanks, but I meant about using them here on TPU for news/front page, using only TrendForce limits the spectrum of whats available.

We cant have it to appear as favoritism, what will fanbois say?

EDIT: yea I should have been more clear the first time.

Well, those are different discussions: whether or not TPU should be looking at other market research firms, what is TrendForce's accuracy track record, et cetera.

In this article, TPU is only reporting what Trendforce is predicting.

For years and years AppleInsider published a lot of ANALyst Gene Munster's predictions including the opt-repeated, never-realized Apple Television (with built-in Apple TV set top box functionality). They also favored Digitimes whose track record was so laughably bad that it became a source of amusement for AppleInsider forum participants.

Morgan Stanley ANALyst Katie Huberty was a longtime AAPL bear; I hope no one actually took her research notes during that period seriously. If they did, they lost a lot of opportunities.

In the same way, ESPN can write an article on who will will the World Series based on one analyst. They aren't required to survey all baseball analysts. Same with Russia's attack on Ukraine. Or videogame reviews. Or results from the last election (regardless of country).

It's up to the readers themselves to seek out various sources and weigh the credibility and accuracy of them.

For sure, no one should be getting all of their tech news solely from TechPowerUp.

However I do wish more tech media sites would actually track and tabulate ANALyst accuracy, like a Starmine score. Too many tech sites just regurgitate what lands in their inbox, like retweeting some random schmuck on the Internet.

 

[eidairaman1]

are always going to see speculation by TrendForce? any other sources with the same news?

And this is why ngreedia was stopped from buying arm, servers/AI

 

[watzupken]

ARM will surely gain popularity in the server space and I feel its going to be mostly at the expense of Intel. While Intel’ s Alder Lake is great in performance, it generally requires quite a fair bit of power to attain that kind of performance. In the server space, the systems run 24/7, which makes power one of the purchase considerations. Apple’s M1 Max and Ultra are a testament that you can still get very good performance while pulling less than half the power of x86 chips. The second part is really the customisability of ARM chips. Most big firms with the means would have developed their own custom ARM processor that is closely tailored to their needs, versus buying a mix and match of processors from the likes of Intel and AMD that may suit most of their needs.