With the arrival of large AI models, server prices have soared 20 times, and the investment value of the sector is highlighted?

In the era of intelligence, making good use of AI has become the core competitiveness of countries, industries, and enterprises. Especially after the birth of large models represented by ChatGPT, the AI ​​industry has been pressed on the accelerator button, and the demand for computing power has exploded.

As one of the computing power infrastructure, the demand for AI servers is expected to benefit from the continuous increase in computing power demand and grow rapidly, and the market value is highlighted.

Since this year, the price of AI servers has been rising and has become the focus of the market. One company revealed that the price of an artificial intelligence server it purchased in June last year increased nearly 20 times in less than a year.

01 AI large model boom is coming

The fundamental reason for the substantial increase in AI server prices is that the explosion of market demand is the key.

In recent years, with the rapid development of artificial intelligence technology, large-scale models such as AIGC have become an inevitable trend. The global investment boom was quickly triggered with the emergence of the phenomenal AI application ChatGPT in November 2022.

Currently, the arms race between major technology giants in large AI models has begun. Major domestic and foreign giants, such as Microsoft, Google, Amazon, etc., have almost all invested in the development of large-scale AI applications.

Domestically, since Baidu took the lead in announcing “Wen Xin Yi Yan” on March 16, Alibaba, 360, SenseTime and other companies have also successively demonstrated the progress of large model projects. Suddenly, the domestic large model field has been turbulent.

The investment boom in AI large models continues to heat up, and the realization of large AI models requires massive data and powerful computing power to support the training and inference process, and the demand for AI computing power will also increase exponentially.

Huawei predicts that by 2030, the demand for computing power due to the outbreak of AI will increase 500 times compared with 2020. The main investment opportunities will focus on servers, optical modules, computing chips, data centers and other hardware fields, bringing huge opportunities.

Among them, the AI ​​server, as an important equipment based on computing power, is expected to usher in rapid development opportunities in the AI ​​era. According to IDC data, the market size of China's AI servers in 2021 will be US$5.7 billion, a year-on-year increase of 61.6%. The market size is expected to grow to US$10.9 billion by 2025, with a CAGR of 17.5%.

02 Core component GPU is “hard to find”

The AI ​​server market with strong demand is experiencing a severe shortage in supply of core components GPU (image processor, acceleration chip), causing prices to continue to soar. Affected by the rising cost of parts and components, the price of AI servers has increased accordingly.

It is reported that the computing power provided by the current general-purpose server CPU (central processing unit) cannot meet the needs of AI applications, while the GPU (image processor, acceleration chip) has real-time high-speed parallel computing and floating-point computing capabilities. It is better at sorting out intensive data operations, such as AI training/inference, machine learning and other application scenarios.

At the same time, traditional servers are usually equipped with up to 4 CPUs corresponding to memory and hard drives. AI servers often need to be equipped with 2 CPUs and 8 GPUs, and some high-end servers even require 16 GPUs. In other words, in AI servers, the demand for GPUs will increase exponentially.

From the perspective of market size, Considering that the unit price of AI servers is more than 20 times higher than that of ordinary servers, the market speculates that as the leakage rate of AI servers increases, the future market potential of GPUs will be huge. According to VerifiedMarketResearch estimates, the global GPU market is expected to reach US$185.3 billion in 2027, and the Chinese market will reach US$34.6 billion in 2027.

On the supply side, Beautiful China continues to curb the development of China’s AI industry and restricts major GPU manufacturers such as NVIDIA (market share as high as 80%) and AMD from selling high-performance GPUs to China.

Domestic upstream GPU shortages are severe, and server manufacturers lack core components, which will naturally affect the production of AI server companies.

In this context, GPU localization is imminent. At present, companies represented by leading communication equipment manufacturing companies such as ZTE are accelerating the deployment of GPU servers.

At the 2022 annual performance briefing, ZTE Executive Director and President Xu Ziyang stated that a ChatGPT GPU server that will support large broadband will be launched by the end of this year.

Xu Ziyang said that there are three main steps. The first is a new generation of computing infrastructure products. It plans to launch a GPU model that supports large-bandwidth ChatGPT by the end of this year to support large model training, including AI servers, high-performance switches, etc.; Second, at the software level, ZTE will put its capabilities into the Digital Nebula solution; third, ZTE will develop its own new generation of AI chips to reduce reasoning costs.

According to many institutions, ZTE is expected to profit from the AI ​​wave set off by ChatGPT. According to the "China Server Market Tracking Report Prelim for the Fourth Quarter of 2022" released by IDC, ZTE's market share has increased from 3.1% to 5.3%, ranking among the top five in the country.

Conclusion:

With the successive launch of large downstream models, the demand for AI computing power is increasing rapidly. From the perspective of industry trends, the process of GPU localization is accelerating. However, there is a big gap between domestic GPU products and overseas leaders such as Nvidia in many aspects, so it is even more difficult to achieve breakthroughs.

For this reason, the market also speculates that AI server prices may continue to increase in the future.

Author: Bottle

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