Server Chip Market New Pattern

Demand for server chips such as data centers and edge computing is rising rapidly as new demands such as artificial intelligence and 5G emerge. In terms of the chip market, these markets also have different needs than the server market previously dominated by Intel x86. In our view, the new demands of the server market in the era of ARTIFICIAL intelligence and 5G include the following.

First, server chip customers are more vertically integrated. In the previous server market, the customers of chip manufacturers were often system integrators such as Dell and HP, which then sold to server customers. However, in the era of artificial intelligence, data centers are concentrated in the hands of a few super customers, such as Google and Amazon, who are more willing to bypass system integrators and directly purchase or even customize chips and do system integration. In this regard, ARM is much more customizable than x86, and customization related design services for large data center customers will be a new market direction.

Second, ai and 5G-related servers handle relatively single tasks (rather than very different tasks at different times of day, as servers in previous data centers did) and require a lot of processing power and computing power, so the processor is only one part of the chip solution. To be competitive you also need to be able to carry other specialized chips to handle these specific tasks. For example, matrix computing acceleration in the field of artificial intelligence, data access processing in the field of 5G and so on.

In this situation, we see other chip manufacturers besides Intel and AMD are actively positioning themselves in this field. Recently, Marvell announced the acquisition of high-performance interconnect chip company INPHI, which further enriched its server related CHIP IP library. Nvidia announced the acquisition of ARM, a significant step into high-performance computing server chip solutions; Qualcomm further strengthens its investment in edge computing server chips and tries to occupy edge computing server market from base station.

Future market pattern forecast

For now, the biggest supplier of server processors is still Intel. We believe that Marvell and Nvidia, both of which are discussed in this article, will provide a strong challenge to Intel in the data center market. On the one hand, Nvidia's strength in the field of high-performance computing gives it a strong fulcrum to promote GPU+ARM CPUS, which is expected to slowly eat into Intel's market from the high-end market. On the other hand, as Internet manufacturers have a stronger and stronger say on data centers, Marvell, like others, may have a bigger and bigger market by directly providing customized server chip designs for terminal customers.

In the emerging server chip market such as 5G edge computing, we believe Qualcomm has a good chance to become a significant chip supplier in the market with its wireless access infrastructure as a starting point. In addition, Nvidia has a presence in 5G stack acceleration and is already working with Verizon to offer 5G vRAN acceleration. There may be some overlap and competition between Qualcomm and Nvidia in this space; Qualcomm is more focused on access and Nvidia is more focused on computing, so if computing power is more important in edge computing we might see Qualcomm and Nvidia working together on a solution, whereas if access is more critical, It is likely that Qualcomm will move beyond 5G vRAN and RF to further roll out the processor component and implement a full 5G Edge computing access + computing solution.