#datacentertechnology

Global Data Centre Equipment Market was valued at USD 60.96 billion in 2023 and is projected to reach approximately USD 145.2 billion by 2030, expanding at a CAGR of 13.2% from 2024 to 2030. This rapid growth underscores the critical role data centers play in today’s digital-first world—serving as the backbone for cloud computing, artificial intelligence, and the Internet of Things (IoT).

Understanding Data Centre Equipment

Data centre equipment encompasses the physical hardware and devices used within data centers to store, manage, process, and transmit data. This includes servers, storage systems, networking devices, power distribution units, cooling systems, and security infrastructure. These facilities are essential for organizations managing vast data volumes—especially cloud service providers, telecom companies, and large enterprises seeking scalable and secure data management solutions.

As global digitalization accelerates, the need for robust and efficient data center infrastructure continues to surge. The proliferation of social media platforms, connected devices, and IoT applications has significantly amplified the demand for enhanced data storage and processing capabilities.

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Key Market Drivers

1. Rising Adoption of Edge Computing

Edge computing—an approach that processes data closer to the source rather than relying solely on centralized data centers—is transforming how data is handled. This decentralization minimizes latency and enables real-time analytics crucial for applications like autonomous vehicles, smart cities, and industrial IoT. Manufacturers are innovating micro data centers, ruggedized servers, and advanced networking solutions designed specifically for edge environments. The ongoing surge in connected devices and real-time processing requirements continues to drive the adoption of such specialized infrastructure.

2. Expansion of IoT and Interconnected Devices

The Internet of Things (IoT) is another major catalyst fueling market growth. As billions of devices and sensors generate vast amounts of data, the need for high-performance, energy-efficient, and scalable data center equipment becomes indispensable. IoT-driven workloads demand high-density storage, faster processors, and intelligent networking systems, prompting major infrastructure investments across industries.

Market Challenges

Escalating Energy Costs and Efficiency Demands

One of the major challenges facing data center operators is rising energy consumption. Running and cooling massive equipment arrays requires substantial power, leading to high operational costs and environmental concerns. While the adoption of energy-efficient cooling systems, server virtualization, and renewable energy integration offers solutions, these often involve heavy upfront investments. Older data centers, not originally designed for energy efficiency, face additional challenges in upgrading infrastructure.

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Emerging Opportunities

Transition Toward Software-Defined Infrastructure

A defining trend shaping the data center equipment market is the shift toward software-defined infrastructure (SDI). SDI leverages software to automate and manage computing, storage, and networking resources, allowing organizations to achieve greater flexibility, agility, and cost-efficiency. Software-defined environments can dynamically allocate resources based on workload needs, reduce operational complexity, and support hybrid cloud deployments—making them indispensable in modern data center strategies.

Market Segmentation Overview

By IT Infrastructure

Servers (dominant segment)

Networking Equipment

Storage Systems

Servers remain the cornerstone of data centers, performing critical computing tasks, hosting applications, and ensuring uninterrupted digital operations.

By Application

IT and Telecom (leading segment)

BFSI (Banking, Financial Services, and Insurance)

Government and Defense

Healthcare

Energy

The IT and Telecom segment dominates due to widespread cloud adoption, IoT integration, and 5G rollout. Innovations like Software-Defined Networks (SDN) and Network Function Virtualization (NFV) are accelerating investments in next-generation data centers.

By Region

North America – Market leader

Asia-Pacific – Fastest growing region

Europe

South America

Middle East & Africa

North America leads the global market due to strong technological infrastructure, cloud adoption, and the growth of online financial and healthcare services. Meanwhile, Asia-Pacific is witnessing exponential growth driven by smart devices, wearable technology, and expanding digital ecosystems in countries like China, India, and Japan.

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COVID-19 Impact

The COVID-19 pandemic moderately impacted the market but ultimately accelerated digital transformation. With businesses shifting online, demand for secure and scalable data storage surged. The widespread use of remote working, e-commerce, and digital services further highlighted the necessity of robust data center infrastructure.

Recent Trends and Innovations

September 2023: VVDN Technologies partnered with Axiado Corporation to develop OCP-compliant Open RAN servers, enhancing telecom data center efficiency.

December 2023: Chinese GPU manufacturer Moore Threads launched the MTT S4000, a high-performance GPU optimized for AI and data center applications.

Leading Market Players

Huawei Technologies Co. Ltd

Cisco Systems Inc.

Nokia Corporation

Avaya Inc.

Dell Inc.

Juniper Networks

F5 Networks

NetApp Inc.

EMC Corporation

Hewlett Packard Co. (HPE)

IBM Corporation

Oracle Corporation

Fujitsu Corporation

The co-packaged optics market is undergoing transformative changes, driven by rising data consumption, the growth of AI and machine learning applications, and the increasing demand for faster and more energy-efficient data centers. Co-packaged optics (CPO), which integrate optical components with switches or processors on a single package, offer promising solutions for overcoming the limitations of traditional pluggable optics in high-speed networking environments.

One of the most defining future trends in the co-packaged optics market is the need for higher bandwidth. Traditional interconnect methods are beginning to show limitations as data rates exceed 400 Gbps and move towards 800 Gbps and beyond. Co-packaged optics are being adopted by hyperscalers and cloud service providers due to their ability to handle such massive data throughputs with reduced power consumption and improved thermal management. These capabilities are essential in meeting the performance requirements of AI and large-scale machine learning workloads, where latency and efficiency are critical.

Energy efficiency is another core trend shaping the market's future. Data centers worldwide are grappling with power and cooling challenges, especially as performance demands soar. Co-packaged optics reduce the electrical-to-optical conversion distances, resulting in lower power usage and heat generation. This shift is aligned with global sustainability goals, encouraging major players to adopt more energy-conscious technologies without compromising on speed or scalability.

Integration with next-generation switch architectures is also becoming a central theme in the co-packaged optics market. As chip designers push toward 51.2 Tbps and even 102.4 Tbps switch platforms, conventional pluggable optics struggle to keep pace due to density and power limitations. CPO enables tighter integration of optics and electronics, optimizing the physical layout for better signal integrity and reduced footprint. This compatibility is opening new doors for designing modular and scalable data center networks capable of evolving alongside technological advancements.

Another emerging trend is the adoption of silicon photonics in co-packaged optics solutions. Silicon photonics technology offers compact, cost-effective, and high-bandwidth optical interconnects. As this technology matures, it's enabling broader deployment of CPO across different tiers of data center infrastructure. The synergy between silicon photonics and co-packaged optics allows for standardized platforms, reducing development complexity and accelerating time-to-market for new solutions.

The co-packaged optics ecosystem is also expanding, with a growing number of collaborations and consortia forming among chip manufacturers, optical component vendors, and system integrators. Initiatives like the Optical Internetworking Forum (OIF) and the Consortium for On-Board Optics (COBO) are playing vital roles in defining open standards and interoperability guidelines. These efforts ensure that CPO solutions can be deployed across various vendor ecosystems, enhancing their appeal to data center operators seeking long-term investment security.

As the market progresses, manufacturing challenges are being addressed through innovations in packaging techniques and materials. Co-packaging involves complex thermal management and alignment requirements. However, advancements in 3D packaging, micro-lens arrays, and automated alignment systems are making it feasible to produce reliable and scalable CPO products. These innovations are crucial for lowering costs and improving the accessibility of co-packaged optics for medium and small-scale deployments.

Another important future trend is the convergence of AI workloads and networking infrastructure. AI and machine learning require high-speed, low-latency interconnects between computing nodes. Co-packaged optics offer the bandwidth and proximity necessary to support such workloads efficiently. This synergy is likely to drive deeper integration of CPO in AI-centric data centers and edge computing platforms, enabling faster model training and data analytics.

Looking ahead, the global expansion of 5G and edge computing will further push the need for distributed, high-speed optical connections. Co-packaged optics will not remain confined to large hyperscale data centers; they are expected to find roles in edge data hubs and 5G base stations where compact size, speed, and energy efficiency are equally vital.