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U.S. chipmakers found to be concerned over slowing data center growth

U.S. chipmakers found to be concerned over slowing data center growth

Latest reports suggest that U.S. chipmakers have a new challenge looming over their heads as there has been a sharp decline in the growth of data centers. This is an unforeseen twist of fate given that cloud and data centers were the chip sector's cornerstones during the COVID-19 pandemic.

The cloud market rarely had to tackle an upsetting outcome, since it took off among businesses over the last decade, thereby nullifying the chance of a precise prediction on whether the arena is recession-proof or will attempt to steady itself in the event of an economic crumble.

Reliable sources have pointed out a slow annual revenue growth for the cloud market this quarter since major tech giants have experienced significant losses in recent times. A primary factor that is responsible for this setback is the inflation-driven advertising crunch.

For instance, Alphabet Inc.’s Google Cloud witnessed a drop of more than 8 percentage points, Microsoft Corporation-backed Azure fell by 6 percentage points, and Amazon’s AWS plummeted by 3 percentage points as compared to previous quarter statistics.

Elaborating on the issue, experts stated that despite weaknesses in regional markets like Europe, global cloud market revenue has remained persistent. During the pandemic, the cloud behemoths had disclosed that they intend to hoard data center equipment for as long as 6 years to save money and efficiently deal with the economic roadblock.

However, this decision does not seem to bode well for certain chip companies such as Intel Corporation, which experienced a drop of nearly 16% in revenue to USD 4.6 billion, as per the latest reports.

Despite these setbacks, companies such as Super Micro Computer Inc., which specializes in customized servers for new technology remain positive that the advent of the metaverse and self-driving cars may provide a new lease for semiconductor corporations soon.

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for numerous websites, including News Origins, spanning the sectors of business, finance, and technology.