In today's world, any business is heavily depends upon services, applications and data contained within a data center which ultimately puts it at the center of any business process and most important asset for daily operations. Companies from various fields use a premise of networked computers and storage to organize, process, store and disseminate huge data. This premise of networked computers and storage is called data center. The data center chip is one of the vital requirements which can be usually found in the server area within a data center premises.
Factors such as advancements in cloud computing and chip technology, rising government regulations regarding localization of data centers are few of the factors driving the global data Center chip market. However, advancements in smart computing devices offering enormous opportunities and high operational cost for data centers are few of factors may restrain the global data center chip market.
The global Data center chip market is segmented on the basis of data center size, chip type, and industry vertical. Based on data center size, the market is segmented as small & medium size and large size. Further, based on chip type, the market is divided into GPU, ASIC, FPGA, CPU and others. Furthermore, on basis of industry vertical, market is segmented as IT & Telecom, manufacturing, retail, BFSI, government, transportation, energy and others.
Growth in Cloud Computing
The key trend that is helping the world of data center is the cloud and its connectivity to billions of connected devices such as PCs, autonomous vehicles, virtual reality systems, and others. When smart devices are connected to the cloud, the data generated can be analyzed in real time, enabling these devices to be more useful data center products. The emergence of artificial intelligence, virtual reality systems, and 5G network has given rise to the number of data centers, which in turn is driving the growth of the data center chip market.
Advancement in chip technology
Technological advancements in memory chip and programmable solutions such as FPGAs, ASICs among others, enhance their performance in connected devices and data centers. For instance, Intels 3D XPoint technology significantly improves access to large amounts of data. Next generation chip such as FPGA and ASIC, can efficiently meet the change in demands for data centers and speed up the performance in other applications. The combination of FPGAs, ASICs with cloud products helps in enhancing the overall performance of data centers. Hence, advancement in technology is driving the global data center chip market.
Government Regulations regarding localization of Data centers
Several countries across the globe have passed data localization laws. This is primarily due to the regulatory and security reasons. Industry verticals, especially BFSI, are stringent regarding hosting its data in a data center out of the country. Therefore, these industries prefer having a local data center. For instance, Oracle, a technology giant in the U.S. proposed to set up a local data center in India for expanding its cloud services. Also, IBM and NTT Communications have two and three data centers respectively in India. Similarly, the Chinese regulatory, Ministry of Industry and Information Technology (MIIT), has also largely favored the issuance of Internet data center (IDC) licenses to local vendors. Furthermore, the Indonesian government Regulation No. 82 mandates Indonesian businesses conducting electronic transactions to store personal data in data centers in the country. Hence, favorable government initiatives to setup local data centers is in turn driving the global data center chip market.
Increase in smart computing devices
Mobile networks are being used to connect all sorts of devices such as automated reading of utility meters, intelligent connectivity of cars, and commercial vehicles to enable drivers to access navigation, infotainment or breakdown services, traffic lights, home security, and assisted living among others. Technological advancements in several mobile computing devices and products, such as smartphones and smart TV, are driving the demand for sophisticated connectivity and enhanced networking solutions. A rise in the adoption of IoT & cloud computing is expected to drive the integration of the chips in the data center servers, which is expected to provide lucrative growth opportunities for the global data center chip market.