Growing data center demand and bill of materials (BOM) line items impact how commodity buyers use contract electronics partners as global data center IP traffic is expected to grow 25 percent CAGR, five years through 2021, from 6.8 zettabytes per to 1 trillion gigabytes. For infrastructure, the market is expected to grow from US$137 billion in 2018 to US$168 billion in 2023, according to IDC.
Cloud vs traditional IT infrastructure
IDC also reports spending on cloud IT infrastructure will increase 8.7 percent CAGR in the period 2018 to 2023, to US$100 billion. But looking at traditional IT spend, there will be a CAGR decline of -0.7 percent to US$68 billion, resulting in cloud IT infrastructure spend eclipsing traditional IT infrastructure spend, and cloud spend reaching 60% of total IT infrastructure spend, by 2023.
In your search results, you can further target design services providers serving additional End Markets, additional Services, plus add numerous Geographies to help you widen your search.
As OEM operations, supply chain, commodity managers and executives look to build out OEM data centers, some of the many electronics manufacturing services (EMS), original design manufacturing (ODM), and OEM companies feeding the rising data center demand for hardware systems are included in this list below.
- Hon Hai
- Dell
- Quanta
- Accton
- Inspur
- Pegatron
- WiWynn
Graph below, procurement sourcing, how some data centers distribute purchasing of services from the many ODM/EMS manufacturing firms offering design and manufacturing services for cloud servers and storage equipment and networking computing hardware.
Two companies driving much of the growth for data center infrastructures include Facebook and Microsoft, satisfying Amazon hyperscale requirements. Read more about their data center infrastructure growth here – geographic footprints included.
Capital expenditure trends for Facebook, Microsoft, and Amazon
Microsoft is planning on having at least 11 additional data centers come online by the end of 2020, and Facebook is planning to open 36 more data centers by 2023 which will almost triple Facebook’s existing data center footprint.
According to Cisco, the number of global hyperscale data centers will grow from 338 (end of 2016) to 628 by 2021. This growth will benefit EMS/ODM server original design manufacturers, otherwise, the latter also known as white-box data center hardware vendors.
Below are representative commodity proportions for servers. DRAM prices continue to fall compared to their 2018 highs. And since DRAM can make up a good portion of server BOMs, this can impact pricing and margins at contract EMS manufacturing partners. There are ways savvy OEM buyers can use this to their advantage.
In your search results, you can further target EMS manufacturing services providers serving additional End Markets, additional Services, plus add numerous Geographies to help you widen your search.
In addition to finding and selection of server contract electronics solutions providers, commodity and purchasing managers focused on server systems BOMs are primarily concerned with sourcing CPUs and chipsets, power supplies, casings and enclosures, storage and DRAM materials procurement. Additionally, suggested reading for sourcing managers and executives: How corporate materials commodities strategy differentiates and transforms manufacturing.
Purchasing data center server bill of materials (BOM)
Hyperscale vendors, like those mentioned in this article, also have replacement demand. This is important to note because much of the CAGR mentioned here only applies to new IT spend. So, the market opportunity for server infrastructure remains enormous.
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