Data Center Physical Infrastructure (DCPI) revenue growth slowed to a mid-single-digit rate in 1Q 2024, as design shifts to support accelerated computing infrastructure and AI workloads need more time to materialize, according to a new report from Dell’Oro Group.
“As I predicted, DCPI revenue growth slowed in 1Q 2024 as deployments related to AI workloads simply need more time to materialize, and to a lesser extent, a difficult comparison to an unseasonably strong 1Q 2023,” said Lucas Beran, Research Director at Dell’Oro Group. “On a positive note, the pipeline for AI-related DCPI deployments continues to grow, as evidenced by vendor backlogs that have eclipsed levels seen during the 2022 supply chain constraints. Fulfillment of this demand is simply a matter of time.
“Many factors are impacting the timing of this DCPI growth related to AI – Vendor manufacturing expansion, data center construction, and power availability all need to align. Furthermore, new data center designs to accommodate rack power densities 3 to 5 times higher than average, to incorporate liquid cooling, and to manage AI training load variability are all new challenges currently being addressed. As they are overcome, I expect growth to materialize in a very meaningful way,” continued Beran.
Additional highlights from the 1Q 2024 Data Center Physical Infrastructure Quarterly Report:
- Eaton, Modine, and Schneider Electric led all vendors in market share gains, while Vertiv lost share.
- Revenue growth was broad based, but North America slightly outpaced all other regions.
- The China DCPI market was the only region to decline, but is expected to return to growth next quarter.
- Hardware sales growth broadly slowed, with the exception of Facility Power Distribution, which was the only market segment to grow at a double-digit rate, due to increasing power distribution requirements of AI workloads.
- Thermal Management growth notably slowed as some colocation end-users are still deploying recently shipped equipment. Looking ahead, we forecast double-digit revenue growth for the 2024 DCPI market after a small upward revision.
- We expect this to be weighted towards the second half of the year as physical infrastructure deployments related to AI workloads begin to materialize.
