Omdia: Foxconn is expected to become the world's largest server vendor

The Zhitong Finance App learned that Omdia published an article stating that Foxconn achieved impressive growth in the ODM direct sales business in 2024, mainly driven by strong demand for AI servers from major US cloud service providers. According to Omdia's latest analytical report, this will give Foxconn the top position in the global server market. This is the first time since Dell took first place from HPE in 2018 that a non-US company topped the server rankings.

“The four major cloud service providers, Microsoft, Amazon, Google, and Meta, account for nearly half of data center capital expenditure in 2024, which significantly affected the competitive server market pattern.” Omdia senior director Vlad Galabov said, “As AI application development and deployment become a top priority for computing users, vendors that work closely with Nvidia have performed particularly well, which has helped Foxconn rise to first place.”

Foxconn isn't the only vendor benefiting from a surge in demand for AI-optimized servers. Quanta Cloud Technologies (QCT), ZT Systems, and Super Micro increased server revenue by more than 100% in 2024. Dell has won large strategic customers such as CoreWeave and xAI. It has also developed a portfolio of professional services and reference designs, including AI consulting services. Manoj Sukumaran, senior chief analyst at Omdia, said: “Despite the changes in rankings, all server vendors saw 2024 as a successful year due to significant market growth.”

2024 is a unique year for the server market due to the high concentration of investments. Omdia predicts that the top 10 user companies account for almost 60% of global server purchases, while the top ten server vendors meet more than 70% of the market demand.

To avoid double counting, Omdia only takes into account sales directly to users when counting ODM companies (such as Foxconn, Pegatron, and Flex). Revenue from servers made for OEMs such as Dell, HPE, and Cisco is not counted. ODM does not count sales realized by its OEM customers.

Sukumaran added, “Foxconn has more room to grow, and it has established a close partnership with NVIDIA (NVIDIA) to produce servers with Blackwell GPU reference designs. Foxconn will be the largest supplier of NVL36 and NVL72 racks to cloud vendors.”

As AI infrastructure deployment enters the next phase, 2025 is expected to be another strong year of development for the data center industry, especially the server market. According to Omdia forecasts, server capital spending will increase by 22% next year, breaking the $280 billion mark. This strong growth trend is expected to continue throughout the 2020s, with the server market reaching $380 billion by 2028 and approaching $500 billion by 2030.

“What we are currently seeing is only the tip of the iceberg of AI specialization and capital expenditure by cloud vendors. In the future, these cloud vendors are expected to see significant increases in server capital expenditure, and CoreWeave's spending may even surpass Oracle's in 2025.” Galabov said.

However, the regulated industry revealed to Omdia that the necessary regulatory framework for large-scale AI production in 2024 is not ready. Also, the company's investment in 2024 was limited due to insufficient GPU supply, but this situation is expected to improve in 2025.