Fourth-quarter 2022 global server shipments declined 7.1% from the prior quarter and 4.3% from the prior year as China-based datacenter operators, as well as server brands, exhibited sluggish shipment momentum while cloud service providers including Meta and Google had weakening demand, according to figures from the latest server report.
Going into first-quarter 2023, amid the global economic slump, large US- and China-based datacenter operators are likely to further cut back their server procurement, while demand from server brands including Dell and HPE will also decelerate. First-quarter 2023 global server shipments are estimated to fall 10% compared to both the prior quarter and the corresponding period of 2022, the figures show.
In sum, large North American datacenter operators had exhibited stronger server demand driving whole-year 2022 global server shipments. Particularly, the aggregated server procurement by the top-3 public cloud service providers – Amazon, Microsoft and Google – showed the strongest on-year growth, reaching nearly 30%.
In first-half 2022, major server manufacturers still struggled with the shortages of some power management ICs (PMIC) and discrete components such as MOSFET. In addition, China's COVID-19 lockdowns also set back their production, resulting in their server supply lagging behind demand.
Although China-based datacenter operators and server brands had decelerated demand in second-half 2022, global server shipments still grew more than 6% on year in whole-year 2022 due to a low base period in 2021 when Europe and North America were seriously undermined by the COVID-19 pandemic and shortages of ICs and components.
Going into first-quarter 2023, demand from US- and China-based datacenter operators, as well as server brands, is expected to weaken. Among them, North American cloud service providers Meta and Google will put their new datacenter projects on hold, leading to a decline in their server procurement by more than 10% sequentially.
China-based datacenter operators and server brands will continue to place weak orders as in the prior quarter, resulting in their demand also declining close to 10% sequentially. As such, first-quarter 2023 global server shipments are estimated to exhibit a 10.2% on-quarter decline and a 10% on-year decline as well. The downfall is similar to that seen in first-quarter 2019, which was about 10% both sequentially and annually.