INDUSTRY OVERVIEW

The U.S. data center market will witness investments of USD 110.21 billion by 2028, growing at a CAGR of 3.57%. The market is aided by the high use of cloud-based services across regions, digitalization initiatives, the demand for streaming online entertainment content at high speeds, the deployment of 5G services, and other factors. Furthermore, cloud computing services and applications will continue growing in the U.S., leading to the development of large hyperscale cloud-based data centers.

KEY TRENDS

Sustainability Measures Adopted by Data Center Operators

• The increased data center power consumption and the need to decrease carbon emissions prompted many service providers to purchase clean, renewable energy sources to power their current and new facilities.
• Data centers are among the largest consumers of power and a leading source of carbon emissions across several locations. Several operators and governments have implemented initiatives to lower carbon emissions from data centers.
• According to one of the operators of the world’s largest PPA marketplace and leading provider of renewable transaction infrastructure, LevelTen Energy, the renewable energy power purchase agreement (PPA) prices in Q2 2022 rose to over 5.3% and around 30% YOY in the North American industry.

AI & HPC Applications Driving Liquid Immersion & Direct-to-Chip Cooling

• Vendors in the U.S. data center market operating in the liquid immersion and direct-to-chip cooling industry are strengthening their offerings through multiple OEM partnerships. For instance, Fujitsu, IBM, HPE, Dell Technologies, and ODM server suppliers actively offer direct-to-chip cooling and liquid immersion server racks to run AI and ML workloads to their HPC clients.
• The Skybox Datacenters facility in Houston has deployed a cooling system in its DownUnder GeoSolutions (DUG) project, which has more than 40,000 servers immersed in liquid coolant in 720 enclosures.
• Microsoft partnered with Wiwynn to test the deployment of a two-phase immersion-cooled server at a data center in Washington.

Adoption of Cloud-based Services

• The U.S. data center market is among the biggest cloud markets in the world. It has the presence of all the major cloud operators, such as Google, Amazon Web Services, Microsoft, Alibaba, Oracle, Tencent, IBM, and others.
• Businesses shifted to the cloud to increase cost efficiency and ensure business continuity and digital transformation. Government agencies have also migrated their applications to a private cloud environment. For instance, in October 2022, the US Army announced a migration project of around USD 1 billion, in which it plans to migrate its IT infrastructure to the cloud. The migration is expected to be completed by 2023.
• Several U.S. data center market operators, such as Equinix, Digital Realty, Cologix, CyrusOne, and CoreSite, host cloud on-ramps to directly and privately access hyperscale cloud service providers. The available cloud on-ramps include Amazon Web Services Direct Connect, Google Cloud Platform Interconnect, Microsoft Azure ExpressRoute, IBM Cloud Direct Link, and Oracle Cloud Infrastructure FastConnect.

SEGMENTATION INSIGHTS

• Some IT infrastructure trends witnessed in the S. data center market are the adoption of NVMe storage, 200/400 GbE ports, ARM-based architecture, server virtualization, and converged and hyper-converged infrastructure.
• The lithium-ion data center battery industry is expected to account for a share of 30−40% by 2024. Modern UPS systems are being innovated to be modular and occupy lesser space in facilities. It is expected that with a significant increase in data being generated and stored, low tolerance for downtime, and need for sustainability, lithium-ion adoption will increase significantly, with the market share of VRLA batteries decreasing significantly.
• The S. data center market witnessed several innovations and changes over time. Several operators are innovating to improve the operations of their facilities. Some innovations include adopting eco-diesel generators, HVO fuel, fuel cells (Hydrogen based), and DCIM solutions.
• Liquid cooling is the most popular cooling technology used in High-Performance Computing (HPC) in data centers to support AI and ML workloads. These technologies require powerful computing capabilities for TPU, where the heat generated exceeds the cooling limit and thus demands superior efficiency to keep the chips working optimally.

GEOGRAPHICAL ANALYSIS

• All the major colocation and hyperscale operators have their presence in the South-Eastern region, majorly in Virginia, and are expanding their footprints and industry share with several new investments.
• The Chicago data center market witnessed maximum demand from the cloud and technology sector. Telecom, entertainment & media sectors were other prominent sectors that increased the demand for data center services, cumulatively creating around 20% of the overall demand.
• Texas is one of the leading states with maximum Foreign Trade Zones (FTZs) with over 30 trade zones. The state is also one of the top locations for FDI capital expenditure and the creation of new jobs from FDIs.
• The top markets in the Western U.S. include Nevada, California, Utah, Oregon, Idaho, and others, which major colocation and hyperscale operators prefer due to good connectivity and proximity to IT hubs.
• The North-Eastern region is likely to witness low hyperscale investments compared to other regions. The edge data center industry is expected to grow significantly in this region in the coming years, especially in locations with space constraints.

VENDOR LANDSCAPE

• The U.S. data center market has the presence of several participants/vendors that are active and are leading to market growth. The vendors offering innovative and advanced technologies will likely gain a higher market share during the forecast period.
• Some of the top IT and support infrastructure providers active in the U.S. data center market include Arista Networks, Cisco Systems, Hewlett Packard Enterprise, Dell Technologies, IBM, NetApp, ABB, Caterpillar, Cummins, Eaton, Legrand, Schneider Electric, Vertiv, STULZ, Rolls Royce Power Systems, Delta Electronics, and others.
• The top colocation operators involved in the expansion and development of facilities across the country include Equinix, Digital Realty, Iron Mountain, QTS Realty Trust, STACK Infrastructure, Vantage Data Centers, Aligned, Compass Datacenters, CyrusOne, DataBank, Switch, NTT Global Data Centers, Cologix and others.
• The U.S. data center market also witnessed several new entrants. Some include AUBix, Corscale Data Centers, Edge Centres, iMCritical, Quantum Loophole, Yondr, and others.