Written by Armita Satari
The data centre physical infrastructure (DCPI) market revenue grew 15% year-on-year in Q2 2023, as AI applications usher in new demand and vendor backlogs continue to grow, according to the Dello’Oro Group.
While this increase is noted as a deceleration in revenue growth for the first time in six quarters, the research and analyst house reports that supply chain limitations are beginning to ease and price realisation are beginning to diminish. Combined with the new AI driven demands and renewed demands from vendor backlogs this has resulted in vendors raising their guidance.
“The DCPI market has blown past our already elevated expectations in 1H 2023.” said Lucas Beran, Research Director at Dell’Oro Group. “Sales growth has been notably strong, but what has been most surprising is the strength in new orders which pushed vendor backlogs to record highs at the end of 2Q 2023. This isn’t isolated to a select group of vendors, as nearly every public vendor has touted continued backlog growth while raising their 2023 guidance.”
Beran adds “This unprecedented rate of growth in 1H 2023 raises questions about a potential digestion cycle in the near term. However, existing backlog levels, record low data center vacancy rates and the emergence of generative AI applications are continuing to drive demand over the medium term. Any potential near-term weakness would be more a factor of tough Y/Y comparisons than weakening demand”.
