Market Overview
The global data center chip market size reached USD 12.1 Billion in 2025 and is projected to grow to USD 18.8 Billion by 2034. This corresponds to a compound annual growth rate (CAGR) of 5.00% during the forecast period from 2026 to 2034. Market growth is driven by the expanding IT industry, continuous technological advancements, R&D efforts, and the adoption of advanced semiconductor manufacturing processes such as the five-nanometer node.
Study Assumption Years
- Base Year: 2025
- Historical Year/Period: 2020-2025
- Forecast Year/Period: 2026-2034
Data Center Chip Market Key Takeaways
- The global data center chip market size was USD 12.1 Billion in 2025.
- The market is expected to grow at a CAGR of 5.00% between 2026-2034.
- Growth drivers include the rising demand for data center chips across industries like manufacturing, transportation, IT, and telecom.
- The increasing use of cloud computing services by businesses and consumers is a primary growth factor.
- Integration of specialized hardware accelerators such as GPUs, TPUs, and FPGAs is boosting AI workload performance.
- North America holds the largest share due to advanced telecom infrastructure, investments in cloud computing, and extensive data-intensive application use.
- Challenges include the complexity of processing workloads while minimizing power use; however, opportunities arise through customized chips like ASICs and DSAs.
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Market Growth Factors
Enterprise and consumer cloud computing have been one of the major factors driving the demand for chips used in data centers. Cloud computing service providers, such as Microsoft Azure, Amazon Web Services (AWS), and Google Cloud, have expanded their data centers. For example, AWS also had a machine learning-driven supply chain management tool that brought together data from multiple systems into a single machine learning-enabled data lake. IBM's Hybrid Cloud Mesh offering enables the management of hybrid multi-cloud infrastructures.
Edge computing and the growth of IoT devices are driving demand. Edge data centers in the IoT are responsible for analyzing wearables, sensors, and connected appliances. According to GSMA Intelligence, 3% penetration of 5G in 2020 will rise to 64% by 2030. With these changes, the requirements of data processing and transmission will increase. The Indian government has stated that it will develop 100 smart cities in a 5G IoT connected way under the Digital India program with a budget of INR 7000 crore.
Another source of growth is artificial intelligence and machine learning (AI/ML) applications as demand continues for high- performance data center microprocessors that are capable of processing large AI/ML data sets. Oracle and GitLab have collaborated to provide GPU GitLab runners on Oracle Cloud Infrastructure (OCI) to support cloud, on-premises, and hybrid AI/ML workloads. Machine learning startup Inflection AI raised US$ 225 Million to power natural conversational human-computer interfaces, another example of an investment in AI-chip technology.
Market Segmentation
Breakup by Chip Type:
- GPU: Dominates the market due to extensive use in AI, data analytics, machine learning, and scientific simulations. GPUs efficiently handle matrix operations and neural network calculations. Acer launched NVIDIA Tesla GPU-powered servers in India, hosting up to eight Tesla V100 32GB SXM2 GPU accelerators. In Japan, KDDI partnered with NVIDIA to offer GeForce Now game-streaming via RTX servers at a Tokyo data center.
- ASIC
- FPGA
- CPU
- Others
Breakup by Data Center Size:
- Large Size: Largest segment, due to management of extensive data, infrastructure, and computing power. Power Grid Corporation India Ltd and Tele India Datacenter signed an MoU to combine resources for improved user experience. Karnataka’s dedicated data center strategy positions it as a premier destination in India, supporting the digital economy.
- Small and Medium Size
Breakup by Industry Vertical:
- BFSI: Largest market segment, given data centers' role in securely processing financial transactions, customer data, and sensitive information. McAfee partnered with Mastercard to provide internet security software to cardholders. BPER Banca Group entered a four-year deal with IBM to modernize its digital infrastructure using hybrid cloud and Kubernetes platforms.
- Manufacturing
- Government
- IT and Telecom
- Retail
- Transportation
- Energy and Utilities
- Others
Regional Insights
North America dominates the data center chip market, supported by growing urbanization, industrial activities, and advanced telecommunications infrastructure. The region benefits from strict data privacy adherence, cloud investments, and enabling technologies like 5G and fiber connectivity. Smartphone data consumption surged from 1.8 GB to 8.5 GB, expected to exceed 64 GB by 2029. Collaboration between NetIX and eStruxture enhances global connectivity through Canadian data centers.
Recent Developments & News
- January 2023: Huawei Technologies launched a 50G POL Prototype upgrading campus networks from 10G to 50G PON, enabling ultra-broadband experiences and future upgrade paths.
- March 2023: Marvell Technology introduced the Nova 1.6 Tbps PAM4 electro-optics platform to support high-speed AI/ML data movement in cloud and data center networks.
- March 2024: ORCA Computing, Pixel Photonics, Sparrow Quantum, and the Niels Bohr Institute collaborate on the Eurostars 'SupremeQ' project, advancing photonic quantum computing technologies.
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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