Covering Scientific & Technical AI | Wednesday, October 9, 2024

AI is Boosting Server Sales 

X-MAN 4.0. Image courtesy of Inspur

Emerging AI workloads are propelling the booming Chinese server market, particularly those hosting programmable co-processors capable of supporting graphics chips used for parallel processing of machine learning tasks.

The chief benefactor has been China’s server leader, Inspur (SHA: 600756). According to datacenter market survey, demand for server co-processors has helped Inspur expand its China market dominance over Huawei, Dell EMC and Lenovo (OTCMKTS: LNVGY). IHS Markit reported that Inspur is riding a wave of demand for AI-ready servers, capturing 39 percent of the Chinese market during the third quarter of 2019. Huawei was a distant second with 14 percent of Chinese server revenues.

While the latest server market data for China do not reflect supply chain disruptions associated with the coronavirus outbreak, the market tracker pegged the Chinese server market at a robust $5 billion during Q3 2019, a 22 percent year-on-year increase. Those gains offset server market losses in the two previous quarters, attributable mostly to U.S.-China trade friction.

Those macroeconomic factors have been overcome by growing demand for servers supporting general-purpose GPUs capable of processing several machine learning computations simultaneously. IHS noted that higher average selling prices for co-processor servers helped generate more than $94 million for Inspur during the third quarter.

“The sequential rise in China server revenue in the third quarter was driven by enterprises and communications service providers, which managed to take advantage of favorable government financing policies,” said Vladimir Galabov, principal technology analyst at IHS Markit.

Previously, “the Chinese government began to gradually ramp up fiscal and monetary stimulus to support growth, resulting in a boost to spending on IT equipment,” Galabov added.

The analyst estimates more than two-thirds of co-processor servers shipped by Inspur within China included up to 16 general-purpose GPUs. Those platforms are increasingly used in datacenters for AI training or for AI inference at edge locations.

IHS Markit also reported that Inspur expects to expand its co-processor server lineup with systems offering Intel’s neural network chip. Inspur and Chinese search giant Baidu (NASDAQ: BIDU) jointly developed a server dubbed X.Man 4.0 billed as the first commercially available server integrating co-processors conforming to an Open Compute Project co-processor specification. The partners tout the new AI server as the first to comply with the co-processor spec, known as Open Accelerator Infrastructure.

Baidu has collaborated with Intel (NASDAQ: INTC) on AI chip development, including Intel’s Nervana neural network processor that targets model training.

The booming Chinese server market also reflected a jump in global revenues, up 7 percent over the previous quarter. IHS said “white box” vendors grabbed about 21 percent of the global server market, followed by Dell EMC (19 percent) and Hewlett Packard Enterprise (15.5 percent).

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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