In today’s digital economy, companies using the latest technologies are becoming key players in the global market. This time, international attention is centered on Foxconn, which could become the first non-American company to lead the server market by the end of 2024. Forecasts predict that total capital spending on servers in 2024 will reach $229 billion, with a notable $29 billion allocated to Foxconn.
The driving force behind Foxconn’s rise is the growing demand from major American cloud service providers such as Microsoft, Amazon, Google, and Meta. These tech giants are increasingly looking for servers optimized for AI workloads. As cloud technologies and artificial intelligence continue to fuel economic growth, Foxconn is strategically carving out its niche in the market. Given the projected shipment volumes, this ODM business is poised to grow exponentially in 2024, overtaking Dell with its $25 billion by the end of the year.
Interestingly, back in 2018, Dell surpassed HPE, which now expects only $13 billion in server revenue for 2024. This ongoing reshuffling within the server market seems to be working in Foxconn’s favor.
Amid increasing competition, it is worth noting that in 2024, the four largest cloud service providers will account for almost half of all data centers expenditures. These companies are strengthening their foothold in the highly competitive server market and driving demand for cutting-edge solutions, especially those designed for AI workloads. Notably, the rising demand for AI-ready servers has coincided with Microsoft stock chart showing consistent upward momentum, reflecting the growing value of AI and cloud infrastructure to its business model. Vendors collaborating with NVIDIA are thriving as AI application development and deployment take center stage.
Meanwhile, other players are making notable strides. Quanta Cloud Technologies (QCT) is ranked fifth with $15 billion, while ZT Systems and Super Micro Computer, each with $19 billion, have more than doubled their server sales in 2024. However, the landscape is far from static. AMD has acquired ZT Systems, though it plans to sell off the manufacturing division, including Inventec’s stake in ZT Systems. On the other hand, Super Micro has faced setbacks, losing significant orders that raise questions about its future in this competitive market.
Dell has also had a strong finish to the year, securing new strategic customers such as CoreWeave and xAI. The company has expanded its offerings to include professional services and reference projects, including AI consulting. Staying competitive will require Dell and others to adopt greater flexibility and innovative engineering, with some strategies drawing parallels to automated trading systems.
The overall trajectory of the server market indicates sustained growth in the coming decade. By 2028, the market is expected to reach $380 billion, edging closer to $500 billion by 2030. Although this growth suggests a peak is on the horizon, the current focus on cloud providers specializing in AI solutions underscores the transformative nature of these investments.
These trends create opportunities for both established players and emerging competitors like CoreWeave, which shows promise in challenging industry giants such as Oracle by 2025.
As Foxconn accelerates its server business and secures massive orders from cloud providers, we are witnessing the dawn of a new technological era, where ODM companies are becoming indispensable players in the global server supply chain.
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