Despite the Chinese government's stricter control over the domestic IT industry, China's cloud computing server demand has not been impacted much so far, but will still need to be closely monitored for the long term, according to sources from the related upstream supply chain.
The Chinese government has launched a series of management policies targeting specifically cloud computing companies following the establishment of Ant Financial, an affiliate of the Alibaba Group.
China has recently demanded all state-owned enterprises to move their data from platforms owned by private companies such as Alibaba and Tencent to a state-run platform.
Some media also reported that China is now considering separating Alipay, a financial service platform offered by Ant Financial, from the parent company and is likely to do the same with WeChat Pay.
Starting September 1, China has implemented Data Security Law, forbidding data from being transmitted to outside of China without permission. Since China is the second-largest market for the cloud datacenter server industry, how the new law will affect demand for servers remains to be seen.
Research firm Canalys pointed out that sales from cloud datacenter hardware services in China were US$6.6 billion in the second quarter of 2021, up 54% on year, slightly weaker than the growth of 55% in the first quarter.
Aliyun, under the Alibaba Group, was the largest platform with a 33.8% market share. Huawei was in second place with a 19.3% market share. Tencent ranked third with 18.8% and Baidu Cloud was the fourth largest with a 7.8% market share, Canalys' numbers show.
Chinese cloud datacenter operators had strong pull-ins of server orders in the first half of 2021, but the growth will slow down in the second half. US-based cloud datacenter operators' order pull-ins have turned robust in the third quarter. Chinese cloud datacenter operators' server shipments in the second half of the year will mainly be supported by demand to upgrade their systems to Intel's Whitley platform.
Although Inventec's server shipments to Chinese datacenter operators only account for less than 10% of the overall volumes, revenues from the orders are able to contribute more than 10% of the overall amount as most of the shipments are rack systems.
Mitac Computing Technology is mainly supplying servers to Chinese server brands, which then supply the machines to local cloud datacenters. Although Mitac has seen weaker momentum from Chinese clients, the orders volumes from them remain on high levels. Mitac expects its shipments to Chinese clients to continue rising in 2022 and the only uncertainty that might affect its performance is the status of component supply.
Article translated by Joseph Tsai
