Overview of China's Server Industry and Market Outlook 2024

Servers provide comprehensive services for various Internet users, offering computing or application services to client devices such as PCs, smartphones, and large systems. Benefiting from the development of cloud computing, 5G, and artificial intelligence, server shipments have grown rapidly, with cloud servers and AI servers becoming the main drivers of market growth.

Currently, Internet enterprises account for 31.0% of the downstream server market, while government, finance, and telecom sectors represent about 25%. With the rapid development of cloud computing and the Internet, data processing demands across industries are increasing, and server applications are expected to deepen, leading to an estimated market size of CNY 2,265.7 billion in 2024.

Compared with traditional server architectures, cloud servers offer high density, elasticity, energy efficiency, and easy scalability. In the global cloud server market, China and the United States are the main consumer countries.

In the second quarter of 2018, China shipped 174,038 cloud servers, accounting for 18% of global shipments, while the United States shipped 712,696 units, representing 73% of the global total. The advantages of cloud servers have made them the mainstream in the cloud computing market.

By 2020, more than 50% of China's data will need to be analyzed, processed, and stored at the network edge, making edge computing a significant driver for the server industry.

GPU (Graphics Processing Unit) is a microprocessor used for image and graphics-related computations, commonly applied in PCs, workstations, gaming machines, and mobile devices such as tablets and smartphones.

ODM (Original Design Manufacturer) refers to a manufacturing model where the supplier handles everything from R&D and design to production and maintenance, while the purchaser is responsible for sales.

OEM (Original Equipment Manufacturer) is a manufacturer that produces products or components according to another company's specifications, also known as contract manufacturing.

Based on usage scenarios, servers can be classified as storage servers, cloud servers, AI servers, edge servers, and others. Based on form factor, they can be multi-node servers, full-rack servers, rack-mounted servers, tower servers, or blade servers.

According to processor architecture, servers are divided into CISC, RISC, and VLIW architectures; by CPU count into single‑socket, dual‑socket, and multi‑socket servers; and by application level into group‑level, department‑level, and enterprise‑level servers.

The operating system is the foundational platform that supports various hardware and software applications on servers.

Operating systems can be categorized into six types: mobile OS, IoT OS, embedded OS, desktop OS, server OS, and cloud OS. In the server domain, the common type is the server operating system, whose users are divided into government (ToG), enterprise (ToB), and consumer (ToC) segments.

From the server shipment structure, cloud servers and AI servers will become the main growth drivers. The Ministry of Industry and Information Technology expects China's AI core industry to exceed CNY 150 billion in 2020, driving related industries to a scale of CNY 1 trillion. Under the rapid development of cloud computing and the Internet, data processing demand across sectors rises, and the 2024 Chinese server market is projected to reach USD 320.7 billion.

China's upstream server hardware still heavily relies on foreign products such as storage and processor chips. The dominant storage chip used is DDR4, supplied by international vendors like Samsung, Hynix, Intel, Qualcomm, and Micron.

Domestic chip self‑manufacturing rates are low, and the Chinese server chip market is dominated by overseas oligopolies. IDC data shows that some foreign chip makers have profit margins up to 60% (e.g., Intel 62.3%, NVIDIA 59.9%).

In 2018, the Chinese server industry's gross margin was 11.2%, a decline of 1.2 percentage points from 2017. The industry is shifting from traditional production to white‑label (OEM) models, with many companies modularizing and standardizing server components, further compressing profit margins.

Initiatives such as the Open Compute Project (OCP) led by Facebook and the Open Data Center Committee (ODCC) led by Chinese BAT companies set component standards and purchase large volumes from foundries, reducing production costs. The rise of white‑label servers has pressured traditional branded server vendors, shrinking their market share.

Chinese professional server manufacturers such as Huawei, Lenovo, and Inspur have shown steady growth in unit shipments, sales, and global market share, with Inspur ranking third worldwide.

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