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Data Center Chip Market

Data Center Chip Market Size, Share, Competitive Landscape and Trend Analysis Report by, Chip Type, Data Center Type and End-users: Global Opportunity and Industry Forecast (2025-2030)

Report ID:

1018

Industry:

Electronics

Published on:

July 2025

Data Center Chip Market Overview

A Data Centre Chip is a specialised semiconductor that manages and processes data in large-scale computer environments like cloud computing or server farms.  These chips are designed to manage large amounts of data, resulting in faster processing times, increased energy efficiency, and optimal performance for applications such as AI, machine learning, and big data analytics. Demand for data centre infrastructure has increased significantly, and digital transformation initiatives continue to increase demand for core IT workloads. AI is likely to drive data-centre demand for at least the first few years of this adoption cycle.

Generative AI has an enormous impact since it drives demand for advanced, high-performance data centre CPUs. AI models, notably large language models (LLMs) like GPT-4, necessitate massive computational resources and memory. To satisfy these needs, firms like NVIDIA and AMD are building specialised GPUs and AI accelerators. The growing need for AI-powered services, such as real-time language translation and image production, is driving data centres to improve their infrastructure. This behaviour leads to the adoption of cutting-edge chips capable of handling the intense workloads of generative AI, hence driving market development.

Data Center Chip Market

Data Center Chip Market Dynamic’s

Workloads related to AI require a significant amount of processing power, particularly when deep learning techniques and huge language models are involved. This has increased demand for specialised chips that are tailored for the parallel processing tasks common in AI computations, such as graphics processing units (GPUs) and tensor processing units (TPUs). There is a rising trend towards implementing AI workloads at the network edge, nearer to where data is created, even though AI processing has historically been done in centralised cloud data centres. 

In 2024, data centres were expected to be accountable for 1.5% of the global electrical usage, or about 415 terawatt-hours (TWh) per year. Energy demand is expected to increase as AI usage grows, which will lead to an emphasis on creating processors with higher energy efficiency and sophisticated cooling systems to control thermal output. Major tech companies are leading this growth; Microsoft intends to spend USD 80 billion on AI infrastructure in fiscal year 2025, while Meta anticipates capital expenditures ranging from USD 64 billion to USD 72 billion. These expenditures highlight the strategic significance of AI capabilities and the requirement for reliable data centre infrastructure driven by cutting-edge chips.

Data centre chips are rapidly being used to accelerate workloads across a wide range of industries. GPUs and AI accelerators support huge models like GPT-4, which takes thousands of GPUs and up to ten megawatts of power for training cycles. In the BFSI sector, high-frequency trading platforms rely on low-latency processors capable of processing millions of transactions per second, whereas the healthcare business uses FPGA-enabled servers for real-time medical picture analysis and genetic data processing, lowering analysis time by more than 60%. E-commerce and streaming companies like Amazon and Netflix use data centre chips to provide personalised suggestions to hundreds of millions of customers, necessitating scalable computational capabilities that can handle petabytes of data each day. With generative AI use expected to increase by more than 20% CAGR, these chips are critical for enabling data-intensive, latency-sensitive, and energy-efficient workloads.

The global chip war has grown more intense on account of the growing geopolitical conflict between the United States and China. Semiconductor technology is no longer only a commercial product; it is now seen by governments as a strategic asset. In an effort to limit China's military capabilities, the United States increased export restrictions on sophisticated computing semiconductors and industrial equipment to China in 2024. These limitations have affected Chinese companies as well as the larger global market by upsetting supply chains. In 2025, the United States raised its tariffs on semiconductors made in China. The Biden administration specifically declared in May 2024 that the semiconductor tax rate will treble in 2025. In contrast, the European Union is working to lessen its reliance on outside vendors by enacting the European Chips Act, which has raised more than US$49 billion in funding. Despite plans to take 20% of the world market for chips by 2030, analysts believe this target is unrealistic with the current state of global affairs.

Data Center Chip Market Segment Analysis

The Data Center Chip Market is Segmented into by Chip Type, by Data Center Type and By End-users.

By Chip Type,

Based on Chip Type, The Market is segmented into Central Processing Unit (CPU), Graphics Processing Unit (GPU), Application-Specific Integrated Circuit (ASIC), Field-Programmable Gate Array (FPGA) and Others (Memory Chips, Storage Chips). The Graphics Processing Unit (GPU) has emerged as the main chip type in the Data Centre Chip Market, with a 32.2% market share. GPUs are widely used in data centres given their greater processing capacity and ability to handle parallel workloads efficiently. This makes them perfect for complicated computational tasks such as deep learning, data analytics, and graphics processing. These competencies are critical as firms increasingly rely on big data and artificial intelligence (AI) to inform decision-making and innovation.  While GPUs dominate the market, other chip types, including as CPUs (Central Processing Units), ASICs (Application-Specific Integrated Circuits), and FPGAs (Field-Programmable Gate Arrays), play important roles. CPUs are adaptable and required for general-purpose computing, but they frequently lack the specialised processing capacity of GPUs.

By End Users,

Based on End Users, the market is segmented into BFSI, Healthcare, Retail, Telecommunications, Media and Entertainment, Energy and Utilities and Others (Government and Defense, Education). In 2024, the BFSI industry accounted for 26.7% of the overall market share. The BFSI industry is experiencing substantial growth thanks to an increased reliance on high-speed data processing, tight security requirements, and the growing usage of complex features such as blockchain technology. These chips provide dependability, security, and efficiency in financial services, where speed and data security are essential. Additionally, the increasing number of fintech and digital banking services enhances the demand for datacentre chips in the BFSI sector. The government industry is expected to generate USD 10.45 billion by 2030. The rise of this industry is linked to the increasing demand for secure chips that provide data storage and encryption in order to manage citizen data and deliver online services. Also, the growing number of smart city projects, which require safe and dependable data transfer, help to drive market growth in this particular segment.

Data Center Chip Market

Data Center Chip Market Region Analysis

North America Data Center Chip Market is expected to account for around 36.5% of the market in 2025. In the United States, the increase in AI usage is a major driver of increased demand for data centre chips. Companies such as Nvidia have reported significant growth in its data centre divisions, with Nvidia's data centre revenue reaching USD 39.1 billion in Q1 2025, up 73% year on year. This reflects the increasing need for GPUs and specialised circuits to handle AI tasks. The growth of hyperscale data centres, which are critical for cloud services and big data analytics, is driving demand for high-performance semiconductor technology.

Government policies are also influencing the market landscape. Tariffs on technology imports from China, Taiwan, and South Korea have caused supply chain disruptions, influencing component costs and availability. The US CHIPS and Science Act, which includes $52 billion in incentives and research funds, seeks to encourage American semiconductor manufacturing. In Canada, government-backed green data centre programs are increasing demand for energy-efficient processors that support long-term operations.

Data Center Chip Market Competitive Analysis

The global data centre chip market is consolidated, with a few key competitors controlling a sizable portion due to their technological leadership, scale of operations, and close integration with cloud service providers. They are significantly spending in research and development to create chips with increased processing power, energy efficiency, and specialised features like AI acceleration or optimised networking. Companies are increasingly building their own chips to improve performance for specific workloads.

Data Center Chip Market Scope:

Data Center Chip Market

Data Center Chip Market Key Players –

  1. NVIDIA Corporation

  2. Intel Corporation

  3. Advanced Micro Devices, Inc.

  4. Micron Technology, Inc.

  5. Broadcom Inc.

  6. Samsung Electronics Co., Ltd.

  7. SK Hynix Inc.

  8. Arm Limited

  9. Google

  10. AWS

  11. Alibaba Group

  12. Texas Instruments Incorporated

  13. Samsung

  14. Marvell

  15. Huawei Technologies Co., Ltd.

Frequently Ask Questions –

  1. Which is the factor driving the market growth?

Ans: The growing emphasis on energy efficiency and the rising adoption of IoT devices is a key factor driving the market growth.

  1. What is the breakup of the global data centre chip market based on the data centre chip market based on the data centre size?

Ans: Based on the data centre size, the global data centre chip market has been segregated into small and medium size and large size, where large size currently holds the largest market share.

  1. Which chip types are most in demand in data centres?

Ans: Processors like CPUs, GPUs, FPGAs, and ASICs are key, with GPUs and AI accelerators seeing rapid growth due to machine learning and big data needs.

  1. What are key challenges businesses should monitor?

Ans: Supply chain disruptions, high R&D costs, and thermal management issues are major concerns, along with evolving standards and increasing pressure for energy efficiency.

  1. How are emerging technologies impacting data centre chip requirements?

Ans: Technologies like generative AI, 5G, and IoT are driving demand for specialized, scalable chips that deliver higher computing power with lower latency and energy use.

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