Inspur widened its lead in China’s server market in the third quarter of 2019 partly due to strong demand for servers with programmable co-processors, designed to handle demanding workloads like artificial intelligence (AI).
Inspur garnered 39 percent of server revenue in China during the third quarter, 25 percentage points ahead of second-ranked Huawei, according to IHS Markit | Technology, now a part of Informa Tech. This gap broadened considerably compared to the second quarter, when Inspur held a 35 percent share of revenue and led Huawei by 18 percentage points, as reported by the latest Data Center Server Equipment Market Tracker report.
Inspur’s performance coincided with a strong recovery in the Chinese server market. Market revenue in the third quarter topped $5 billion, up 22 percent sequentially. This follows quarter-to-quarter declines of 13 percent in the first quarter and 5 percent in the second quarter.
“Poor macroeconomic conditions spurred by the U.S.-China trade war impacted the Chinese server market in the first half of 2019,” said Vladimir Galabov, principal analyst at IHS Markit | Technology. “The sequential rise in China server revenue in the third quarter was driven by enterprises and communications service providers (CSPs), which managed to take advantage of favorable government financing policies. Earlier in 2019, the Chinese government began to gradually ramp up fiscal and monetary stimulus to support growth, resulting in a boost to spending on IT equipment.”
Demand for server co-processors takes off
Inspur benefitted from strong demand for servers that integrate programmable co-processors like general purpose graphics processing units (GPGPUs). These co-processors are being employed to process applications of highly parallel nature, where many small computations need to be executed simultaneously, such as AI and machine learning (ML).
Co-processor-equipped servers have higher average selling prices than other servers and generated more than $94 million in sales for Inspur in the third quarter of 2019, driving about 5 percent of the company’s revenue in China.
Interestingly, more than two-thirds of the servers with co-processors that Inspur shipped in China had a 16- general-purpose computing on graphics processing units (GPGPU) capacity. These servers are well-suited for AI training in the data center or large-scale AI inference outside of the data center, at edge locations.
In a conversation with IHS Markit | Technology at the SC19 International Conference in November, Inspur highlighted its plans to expand its co-processor server roadmap, including offering systems with Intel’s Neural Network Processors suited for AI deep learning applications. The roadmap incorporates a server jointly developed with Baidu, called X-Man 4.0. This is expected to be the first commercially available server to have co-processors that conform with the newly developed Open Compute Project co-processor specification, called the Open Accelerator Infrastructure.
Server market gets a trade tailwind
IHS Markit | Technology believes the macroeconomic recovery observed in the third quarter of 2019 continued in the final quarter of the year. Looking forward, the recently signed phase-one of the U.S.-China trade deal will represent a tailwind for the China server market in 2020.
Other server market highlights
- Huawei, White Box Vendors, Dell EMC and Lenovo rounded up the top-5 server rankings in China with 14 percent, 12 percent, 9 percent and 8 percent each, respectively.
- Server unit shipments to China increased 23 percent quarter-over-quarter (QoQ) and 3 percent year-over-year (YoY) to reach 979,000 in the third quarter of 2019, following two quarters of contraction.
- Worldwide server revenue in the third quarter was up 7 percent QoQ and down 8 percent YoY to $19.6 billion.
- Worldwide in the third quarter, white box vendors led in revenue market share, with a 21 percent portion of the market; Dell EMC was second, at 19 percent, and HPE was third, at 15.5 percent.
Data Center Compute Intelligence Service
The quarterly Data Center Server Equipment Market Tracker report presents analysis and trends for data-center servers, including form factors, server profiles, market segments and servers by CPU type and for co-processors. The report also includes information about Ethernet network adapters, including analysis by adapter speed, CPU offload, form factors, use cases and market segments.