The global data center chip market size was valued at USD 11.5 Billion in 2024. The market is expected to reach USD 18.3 Billion by 2033, growing at a CAGR of 5.3% during the forecast period of 2025-2033. This growth is driven by the expanding IT industry, continuous technological advancements, extensive R&D efforts, and the adoption of advanced semiconductor manufacturing processes like the five-nanometer technology.
Study Assumption Years
- Base Year: 2024
- Historical Years: 2019-2024
- Forecast Period: 2025-2033
Data Center Chip Market Key Takeaways
- The global data center chip market size reached USD 11.5 Billion in 2024.
- The market is expected to exhibit a CAGR of 5.3% during 2025-2033.
- The forecast period spans from 2025 to 2033.
- The extensive utilization of cloud computing services by businesses and consumers is a primary growth factor.
- Integration of specialized hardware accelerators like GPUs, TPUs, and FPGAs to optimize AI workload performance is driving market trends.
- North America accounted for the largest market share due to advanced telecommunications infrastructure and high cloud computing investments.
- Customized chip solutions including ASICs and domain-specific architectures present key growth opportunities.
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Market Growth Factors
The global data center chip market is primarily driven by the extensive utilization of cloud computing services by both businesses and consumers. This surge in cloud adoption has escalated the need for powerful and energy-efficient chips that can efficiently support virtualization, storage, networking, and critical workload operations. Cloud service providers such as Microsoft Azure, Amazon Web Services (AWS), and Google Cloud are expanding their infrastructure, fueling the demand for advanced data center chips in the coming years. For instance, AWS’s launch of a machine learning-powered supply chain management application exemplifies the technological advancements requiring robust chipsets to handle diverse data operations.
The integration of specialized hardware accelerators such as Graphics Processing Units (GPUs), Tensor Processing Units (TPUs), and Field-Programmable Gate Arrays (FPGAs) is propelling the data center chip market. These accelerators optimize the performance of AI workloads, which are increasingly common across multiple industry verticals. The market is also witnessing the adoption of advanced semiconductor manufacturing process nodes like 7nm and 5nm technologies, enabling higher transistor densities, improved performance, and reduced power consumption. These advancements collectively contribute to enhancing data center efficiencies and supporting the increasing AI and machine learning demands.
The expanding Internet of Things (IoT) ecosystem and edge computing are significantly influencing market growth. Edge data centers process and analyze real-time data generated by smart wearables, sensors, and connected devices, thereby improving data security, reducing latency, and enabling faster decision-making. The global 5G market penetration, expected to rise from 3% in 2020 to 64% by 2030, further amplifies IoT and edge computing adoption. Government initiatives like India’s Digital India project, which funds 100 smart cities powered by IoT, also drive demand for data center chips optimized for handling distributed, real-time data processing at edge locations.
Market Segmentation
By Chip Type:
- GPU: The largest segment, GPUs are extensively used in data centers for AI, data analytics, machine learning, and scientific simulations due to their ability to perform matrix operations and neural network computations efficiently. Examples include Acer’s NVIDIA Tesla GPU-powered servers and KDDI’s partnership with NVIDIA to offer RTX gaming servers in Tokyo.
- ASIC
- FPGA
- CPU
- Others
By Data Center Size:
- Large Size: This segment accounts for the largest market share. Large data centers manage extensive data volumes, infrastructure, and computing power. Examples include India’s Datasamudra datacenter, highlighting the collaboration between Power Grid Corporation India Ltd and Tele India Datacenter to improve user experience.
- Small and Medium Size
By Industry Vertical:
- BFSI: Holds the largest market share, leveraging data centers to securely analyze and process financial transactions and sensitive customer data. Partnerships like McAfee with Mastercard and BPER Banca Group’s digital transformation with IBM exemplify BFSI's strong data center chip dependency.
- Manufacturing
- Government
- IT and Telecom
- Retail
- Transportation
- Energy and Utilities
- Others
By Region:
- North America: The dominant region with the largest market share, driven by strong urbanization, industrialization, sophisticated telecommunications infrastructure, and stringent data privacy standards. Data consumption with faster networks like 5G is expected to grow from 1.8 GB to over 64 GB by 2029, further accelerating demand.
- Asia Pacific
- Europe
- Latin America
- Middle East and Africa
Regional Insights
North America leads the global data center chip market owing to the development of advanced telecommunications infrastructure and investments in cloud computing. The region’s data consumption via smartphones is projected to increase significantly from 1.8 GB to more than 64 GB by 2029, supported by 5G and fiber connectivity. This growth is underpinning the demand for efficient and secure data center chips in North America.
Recent Developments & News
- January 2023: Huawei Technologies Co. Ltd. launched an industry-first 50G POL prototype for next-generation Wi-Fi 7 campus networks, enhancing broadband experiences and future network upgrade paths.
- March 2023: Marvell Technology Inc. introduced the Nova 1.6 Tbps PAM4 electro-optics platform, enabling high-speed data movement for AI/ML and data center networks.
- March 2024: ORCA Computing, Pixel Photonics, Sparrow Quantum, and the Niels Bohr Institute announced collaboration on the Eurostars project 'SupremeQ' to accelerate photonic quantum computing commercialization across the UK, Germany, and Denmark.
Key Players
- Achronix Semiconductor Corporation
- Advanced Micro Devices Inc.
- Arm Limited
- Broadcom Inc.
- Fujitsu Limited
- Intel Corporation
- Marvell
- Micron Technology, Inc.
- NVIDIA Corporation
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