SYSTEMS

Demand for AI systems plus the shortage of DRAM and NAND are shaping the global market

Servers employing x86 chips from AMD and Intel now account for little more than half of server revenue, according to the latest figures from IDC.

In its Worldwide Quarterly Server Tracker for Q1 2026, the analyst firm says that non-x86 server revenue hit $58.7 billion, representing a startling increase of 107 percent over the same period last year.

The results mean that those non-x86 servers make up 47.9 percent of the market revenue, closing in rapidly on the amount of cash spent on x86 boxes.

The growth in non-x86 turnover is likely thanks to systems powered by Nvidia’s AI chips featuring Arm cores. Although there is high demand for these, they also cost a pretty packet compared to an average datacenter box.

In fact, IDC noted a stark divide shaping the worldwide server market, which reached $122.6 billion in vendor revenue during this period, a 30.4 percent increase year-on-year.

On the one hand, AI infrastructure investment from hyperscalers and large cloud providers is “running at a scale that shows no sign of plateauing,” while everything else - the non-accelerated segment - faces a supply-constrained environment, thanks largely to that AI infrastructure spending.

As Reg readers will know, memory chipmakers are prioritizing manufacturing capacity for higher margin products for AI servers and GPUs, starving the rest of the market of supply.

Component availability, particularly DRAM and NAND flash, is limiting near-term shipment volumes from vendors, IDC says, though order pipelines are strong. Supply of the right chips is therefore the chief limiting factor on server market growth.

Revenue for x86 servers still reached $63.9 billion, but this was a decline of 2.9 percent due to those component supply constraints impacting shipment volumes. 

GPU accelerated servers pulled in $68.9 billion for the vendors, up nearly 25 percent year-on-year, while other accelerated servers surged a massive 122 percent to $17.7 billion. The latter category represents AI systems configured with FPGAs or ASICs rather than GPUs.

IDC’s spin on the data is that AI infrastructure adoption is no longer limited to hyperscalers, thanks to developments such as government-led sovereign AI initiatives, while the non-accelerated segment tells a more nuanced story.

Although revenue here declined, underlying demand remains strong, but many enterprise customers are holding out against elevated component prices.

“Companies aren’t pulling back from infrastructure investment; they’re just not getting servers as fast as they need them. Longer term, emerging workloads, including agentic applications and physical AI ecosystems, will keep demand elevated well beyond the current cycle,” commented IDC research director Juan Seminara.

The firm says it expects to see supply normalization beginning in 2027, with capacity relief coming as chipmakers bring new fabrication plants online.

Across the last two decades, non-x86 servers accounted for less than ten percent of revenue, and most of that went to IBM which emerged as the last vendor of proprietary servers as Oracle lost interest in Sun and the likes of HPE decided they couldn't sustain businesses built on exotic architectures. ®