Foxconn has achieved remarkable growth in its ODM direct sales business in 2024, mainly driven by strong demand for AI servers from large cloud service providers in the United States. According to Omdia’s latest analysis report, this will enable Foxconn to take the lead in the global server market. This is the first time a non US company has topped the server ranking market since Dell took first place from HPE in 2018.
“Microsoft, Amazon, Google, and Meta, the four major cloud service providers, accounted for nearly half of the data center capital expenditures in 2024, significantly impacting the competitive server market landscape, “said Vlad Galabov, Senior Director of Omdia.
Foxconn is not the only manufacturer benefiting from the surge in demand for AI optimized servers. Quanta Cloud Technologies (QCT), ZT Systems, and Super Micro will experience server revenue growth of over 100% in 2024. Dell has won large strategic clients such as CoreWeave and xAI. It has also developed a combination of professional services and reference designs, including artificial intelligence consulting services. “Despite changes in rankings, all server vendors see 2024 as a successful year due to significant market growth, “said Manoj Sukumaran, Senior Chief Analyst at Omdia
2024 is particularly unique for the server market due to the high concentration of investment. Omdia predicts that the top 10 user companies account for almost 60% of global server procurement, while the top 10 server vendors meet over 70% of market demand.
To avoid double counting, Omdia only includes its direct to user sales when counting ODM companies such as Foxconn, Pegatron, and Flex. Revenue from servers manufactured for OEMs such as Dell, HPE, and Cisco is not included in the calculation. ODM will not include sales achieved by its OEM customers in the statistics.
Sukumaran added, “Foxconn still has greater room for development, as it has established a close partnership with NVIDIA to produce servers based on Blackwell GPU reference designs. Foxconn will become the largest supplier of NVL36 and NVL72 racks to cloud vendors.”
As AI infrastructure deployment enters the next stage, 2025 is expected to become another strong year of development for the data center industry, especially the server market. According to Omdia’s forecast, server capital expenditures will increase by 22% next year, surpassing the $280 billion mark. This strong growth trend is expected to continue throughout the 2020s, with the server market size reaching $380 billion by 2028 and approaching $500 billion by 2030.
What we are currently seeing is just the tip of the iceberg in the AI specialization and capital expenditures of cloud vendors. In the future, these cloud vendors’ server capital expenditures are expected to increase significantly, and CoreWeave’s expenditures may even surpass Oracle’s by 2025 Galabov said.
However, the regulatory industry has revealed to Omdia that the necessary regulatory framework for large-scale AI production by 2024 is not yet ready. Moreover, due to insufficient GPU supply, the investment of enterprises in 2024 has been somewhat restricted, but this situation is expected to improve in 2025.