The market for power and cooling equipment continues to grow as supply chain pressures ease, analyst report shows.
Sales of data center power and cooling equipment and other physical infrastructure saw strong growth during the first quarter of 2023, according to a new analyst report by the Dell’Oro Group. The sales momentum is expected to continue through the year thanks to heavy demand and easing supply chain constraints
Revenue for data center physical infrastructure (DCPI) increased for the fifth straight quarter, growing 18% year-over-year to reach $6.1 billion in sales during Q1 2023.
For the full year, revenue is expected to grow 12% year-over-year and reach $26.7 billion in sales in 2023 with uninterruptible power supplies (UPSes) and thermal management solutions making up half the revenue, said Lucas Beran, research director of the Dell’Oro Group and author of the report.
Beran cites three reasons for the revenue growth. First, vendors began to see supply chain improvements during the 2022 fourth quarter and those improvements have continued into 2023, enabling the companies to begin to work through their backlog of orders, he said.
“Easing supply chain constraints are enabling DCPI vendors to manufacture and ship more products, and lead times are starting to come down,” Beran told Data Center Knowledge in an interview.
The second factor that Beran believes has led to strong revenue growth is that the DCPI vendors have increased their prices as they pass on the higher costs of raw materials, components and logistics to their customers.
Third, cloud and colocation service providers – the primary drivers of growth in this market – continue to expand their global data center footprints to meet high demand, while enterprises are right-sizing and modernizing their on-premises data center infrastructure, Beran said.
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