The World Market for Data Center Accelerators 2025: Revenues Set to Increase from $36.22 Billion, Reaching $143.45 Billion by 2029 (2025)

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The data center accelerator market size has grown exponentially in recent years. It will grow from $26.38 billion in 2024 to $36.22 billion in 2025 at a compound annual growth rate (CAGR) of 37.3%. The growth in the historic period can be attributed to increasing data processing demands, demand for energy efficiency, deep learning adoption, data center consolidation.

The data center accelerator market size is expected to see exponential growth in the next few years. It will grow to $143.45 billion in 2029 at a compound annual growth rate (CAGR) of 41.1%. The growth in the forecast period can be attributed to customization and scalability, enhanced security requirements, demand for low-power accelerators, real-time analytics requirements, security acceleration solutions. Major trends in the forecast period include growing use of graphics processing units (GPUs), expansion of high-performance computing (HPC) applications, integration with cloud services, collaboration for standardization, edge computing acceleration.

The growing demand for cloud-based services is expected to significantly boost the growth of the data center accelerator market in the coming years. For instance, according to Forbes, a U.S.-based business magazine, IBM's stock has increased by over 17% year-to-date, outperforming the Nasdaq-100, largely due to heightened interest in artificial intelligence and expectations of IT spending recovery in 2024. The company's Q4 2023 results surpassed expectations, with a 4% year-over-year revenue increase to $17.4 billion and earnings around $3.87 per share. Thus, the surge in demand for cloud-based services is propelling the growth of the data center accelerator market.

The rising number of data centers is anticipated to significantly drive the growth of the data center accelerator market in the coming years. For example, according to Savills, a UK-based real estate services firm, 60% of South Korea's data center capacity is currently concentrated in Seoul, with projections indicating this could increase to 80% by 2029. To alleviate this concentration, the Korean government is promoting data center development in other regions by providing incentives such as discounted power and infrastructure support. Therefore, the growing number of data centers is propelling the growth of the data center accelerator market.

Major companies operating in the data center accelerator market are adopting strategic partnerships to co-develop data center accelerator chips to drive their revenues in the market. For instance, in October 2022, Intel Corporation, a US-based semiconductor corporation, partnered with Google LLC, a US-based technology corporation, to jointly launch the E2000 chip, a co-designed chip to improve data center performance. E2000 is an infrastructure processing unit (IPU), which frees up the CPU to conduct computation by handling network processing activities. It also provides an additional layer of protection between various cloud service users by encrypting data. It is included in Google's latest virtual machine product, C3 VM, which is driven by Intel's fourth-generation Xeon CPUs.

Major companies in the data center accelerator market are increasingly focused on introducing advanced solutions, such as the Alveo U55C, to enhance their competitive positioning. For instance, in December 2023, Intel, a US-based semiconductor manufacturer, unveiled its 5th Generation Xeon Processors. These processors are engineered to significantly enhance performance for large-scale AI models and data center workloads, delivering up to 42% higher inference performance. This advancement enables data centers to manage complex AI tasks with greater efficiency. With its global presence, Intel can leverage a diverse pool of talent and resources, ensuring its competitiveness in the fast-evolving technology landscape.

In May 2023, KKR, a US-based global investment firm, acquired CoolIT for $270 million. This acquisition is intended to bolster KKR's position in the data center market by enhancing its capabilities in liquid cooling solutions. CoolIT is a UK-based company that specializes in advanced thermal management technologies tailored for data centers and high-performance computing environments.

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