AI Data Centres: Bain & Company Predict Computing Revolution
According to Bain & Company, the AI market is expected to surge to almost US$1tn by 2027.
With the market for AI and its hardware continuing to expand, the company’s fifth annual Global Technology Report indicates that it will continue to grow to 40-55% a year and lead to revenues between US$780bn to US$990bn.
The report examines AI and its “sweeping impact” on industry structure, enterprise value, data centres and business opportunities, amongst other areas.
“The pace of technological change has never been faster, and senior executives are looking to understand how these disruptions will reshape the sector,” the report says. “Generative AI (Gen AI) is the prime mover of the current wave of change, but it is complicated by post-globalization shifts and the need to adapt business processes to deliver value.”
Likewise, it anticipates data centres to only get bigger, with more processing moving closer to the edge, which Bain suggests could lead to greater chip shortages. Already, AI is reshaping how data centre facilities operate - an impact which is still growing.
Confronting global AI demands
In 2024, the technology sector moved into the AI phase of computing, sparking overwhelming customer demand and greater pressures on data centres to deliver. Businesses like cloud service providers and technology vendors are spending more on AI than ever before, leading to increased adoption rates of the technology.
As a result, AI chips have been short in supply in 2024, as companies scramble to get their hands on the latest technology to remain competitive. Countries like the United States have invested billions of dollars in semiconductor-related research and development to reduce time-to-market for new technologies.
In this way, Bain indicates that this level of demand for upstream chip components could rise by 30% or more by 2026. This will put greater pressure on manufacturers, the company states, in addition to the cost of larger data centres jumping from US$1bn to US$4bn to as high as US$10bn and US$25bn in just five years as their capacity expands.
“These changes are expected to have huge implications on the ecosystems that support data centres including infrastructure engineering, power production, and cooling,” the consultancy notes.
Accelerating AI across industries will inevitably put pressure on the supply of graphics processing units (GPUs) for data centres. As demand continues to soar for computing resources to train and operate large language models (LLMs), increased purchases have major implications for the global semiconductor supply chain.
In particular, Bain cites the breakthrough of Gen AI in 2022 as causing the semiconductor industry to swell. Sales continue to rise enormously, with organisations like Nvidia and AMD reaping the benefits.
As a result, major cloud service providers are showing no signs of slowing down, eager to expand their investments into AI and accelerated computing. This contributes further to expanding data centre demands, with Bain citing that - if GPU demand doubles by 2026 - suppliers of key components would need to increase their output by 30% or more.
Demanding more from data centres
As appetite for AI and computing power continues to spearhead data centre growth, AI also stands to transform edge computing. Bain suggests these changes will strain already-pressured supply chains as leaders battle for resources, which include labour and electricity.
As data centres and edge computing evolve to suit the next generation of technology, the report highlights that enterprises may need to confront their current strategy.
With AI requiring high levels of energy and power, data centres are having to expand and scale up to meet changing needs. Today, some of the largest data centres that are run by hyperscale cloud service providers range from 50 megawatts (MW) to 200 MW. However, Bain suggests that the significant AI loads will lead these companies to explore data centres in the one gigawatt (GW) range or higher.
“Enterprises across the sector should be examining their market position and rethinking strategic ambitions to ensure they remain competitive in their chosen domains.”
Such a significant increase could have huge implications on the ecosystems that support these facilities, including infrastructure engineering, power production and cooling. It is safe to say that the growing requirements of data centres will contribute to capabilities being strained even further - resulting in greater environmental impact or resource shortages.
To confront this, the report says. “Data centre supply chain providers have a formative opportunity to reshape their roles in the market as mega centres proliferate and edge computing evolves.
“These players will focus on building capacity to scale and developing meaningful partnerships with engineering firms that can help meet the challenges of large data centres and more sophisticated edge computing.”
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