After a disappointing first quarter, the server market continued to decline in the second quarter. The new generation of server chips from Intel and AMD are under pressure to turn the tide.

Digitimes speaks of a 5.7 percent decline in server sales compared to the first quarter of 2023, which was also not a peak period. The main reason for the decline is slowing public cloud growth. Many millions of dollars are still being invested in cloud services every quarter, albeit less explosively than during the corona pandemic, when organizations had to accelerate digitization.

As a result, the big cloud service providers have also had to review their own investment strategies. You invest less in breadth, but the acquisition budgets remain free for high-end servers that can support generative AI capabilities. Digitimes expects this trend to continue in the second half of 2023.

No influx of new chips

The new chip generation is now ready for mass sale. At Intel, the Granite Rapid chips, the successor to the Sapphire Rapids, are in the waiting room. AMD presented its updated Epyc Genoa X chips at the end of June and wants to impress Bergamo in particular.

Normally, the launch of new server chips would give a boost to the market, but that would be disappointing this year. Although Digitimes forecasts positive growth again for the third and fourth quarters, the growth rate should not be in the double digits. Inflation will also lead to a more conservative attitude towards IT investments in 2023.

Almost all IT hardware segments show a negative trend this year. The PC industry doesn’t seem to be able to recover and memory prices are also historically low. The chip manufacturers are also feeling this in their wallets. The IT industry is therefore one of the few to look back on the Corona period with nostalgia.