Released June 27, 2024 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info this week presented a complimentary webinar regarding the outlook for the global data center and semiconductor sectors, with David Pickering, IIR's vice president for the Industrial Manufacturing Industry leading the discussion. These two cutting-edge industrial sectors are not only contingent on one another in many ways but have shown similar growth trends over the past few years, with spending in both sectors escalating rapidly during and in the aftermath of the onset of the COVID-19 pandemic. During the height of COVID, people shifted rapidly online for everything from shopping to learning to working to socializing, and suddenly the data centers and chips that drive these interactions became of paramount importance, and a wave of construction began.
In addition, as the pandemic unfolded, consumer spending shifted to encompass a large amount of consumer electronics to be used in the phones and computers that kept us connected. Shipping of semiconductors from their manufacturing sites (primarily in Asia) to the rest of world became difficult as both the means of manufacturing and shipping were impacted by worker health and social distancing requirements. Suddenly, reshoring of semiconductor manufacturing sites to domestic locations became of paramount importance to get the chips to the manufacturers that needed them.
In addition, new challenges and headwinds are emerging for both sectors as technologies such as artificial intelligence (AI) become more mainstream.
Data Centers
Industrial Info is tracking more than $795 billion worth of active data center projects throughout the world, including more than $577 billion of which has been deemed as having a medium to high probability (70-99%) of moving forward as planned. Construction of data centers is most prominent in the U.S. and India, which also host the most operational plants. Data centers generally require three things to encourage development and succeed: strong power supply, internet reliability and government stability, meaning that most active projects are seen in countries with these factors in place, such as the U.S., India, China and Australia.
As technology has evolved, so have the types of data center. Many data centers are home to colocation services that provide space for the data needs of multiple companies. While all data centers use large amounts of power, this type of data center is the least power-hungry. Moving up the chain a bit are facilities specifically geared toward mining Bitcoin and other cryptocurrencies. While these data centers typically have a smaller footprint and often use modular construction methods, they generally use more power than the typical colocation facility. The most power-hungry of all data centers are those used for AI applications. These can use up to five times the power of other data centers.
Power use in data centers is of prime importance and greatly guides trends in the sector. For example, as many data center companies want to make their environmental footprint greener, they are arranging purchase agreements and working with power developers to provide renewable energy for their facilities. Demand is being placed on the oil and gas sector to provide the fuel needed for these operations. Power supply can be a constraining factor where supply may not be enough to meet anticipated demand. Areas of northern Virginia, which has one of the strongest concentrations of data centers in the world, are having to curtail development because of an inability to supply these facilities with the power that they will require.
While data centers are typically short-lived projects, often moving from planning to completion within 18 months, power generation and transmission projects take much longer to permit than a data center does, putting a constraint on power supply for new data centers. Many developers are considering on-site renewable energy generation, and cutting-edge power sources such as geothermal power (depending on location) and small modular reactors are being considered as future means of power.
Power demand required by data centers is expected to rise from 17 gigawatts (GW) to 35 GW by 2030 in the U.S., and consumption throughout the world is set to rise from 53,000 terawatt-hours to 71,000 TWh by 2050. Questions of whether the power industry can keep up with this growth are of great importance for future development.
Semiconductors
Like data centers, semiconductor plants have seen strong investment since the onset of COVID-19, and this is expected to continue growing in the coming years as the tech sector develops and new technologies emerge.
Many of the world's semiconductors are produced in China and Tawain, near automotive- and electronics-manufacturing sites, but the sector's footprint is becoming more widespread. A prominent example of this can be seen in the rapid development of semiconductor fabrication plants (fabs) in the U.S. when the CHIPS and Science Act of 2022 began providing tax incentives for the construction of new fabs in the U.S. Two of the sector's biggest players, Intel and Taiwan Semiconductor Manufacturing Company Limited, have combined active projects worth more than $120 billion in the U.S. alone and $214 billion throughout the world.
Like the data center sector, semiconductor manufacturers also are concerned about power supply. As chip sizes shrink, which typically happens over the passage of time, the energy required to manufacture them grows significantly. Chip-makers are attempting to reduce this energy consumption through new technologies and adopt renewable energy to power plants. In addition, gas abatement and recycling technologies also are being studied as a way to reduce environmental impact, as are greener, alternative chemicals used in the manufacturing process.
In summary, the data center and semiconductor sectors are both striving to develop the latest technologies while balancing energy consumption and environmental, social and governance (ESG) ambitions. The two sectors are seeing rapid development in all parts of the world, and this strong buildout is presenting many new and unprecedented challenges as consumer demand continues to escalate.
If you missed this webinar or would like to revisit some of its highlights, the presentation soon will be available in Industrial Info's On-Demand Webinar Library.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
In addition, as the pandemic unfolded, consumer spending shifted to encompass a large amount of consumer electronics to be used in the phones and computers that kept us connected. Shipping of semiconductors from their manufacturing sites (primarily in Asia) to the rest of world became difficult as both the means of manufacturing and shipping were impacted by worker health and social distancing requirements. Suddenly, reshoring of semiconductor manufacturing sites to domestic locations became of paramount importance to get the chips to the manufacturers that needed them.
In addition, new challenges and headwinds are emerging for both sectors as technologies such as artificial intelligence (AI) become more mainstream.
Data Centers
Industrial Info is tracking more than $795 billion worth of active data center projects throughout the world, including more than $577 billion of which has been deemed as having a medium to high probability (70-99%) of moving forward as planned. Construction of data centers is most prominent in the U.S. and India, which also host the most operational plants. Data centers generally require three things to encourage development and succeed: strong power supply, internet reliability and government stability, meaning that most active projects are seen in countries with these factors in place, such as the U.S., India, China and Australia.
As technology has evolved, so have the types of data center. Many data centers are home to colocation services that provide space for the data needs of multiple companies. While all data centers use large amounts of power, this type of data center is the least power-hungry. Moving up the chain a bit are facilities specifically geared toward mining Bitcoin and other cryptocurrencies. While these data centers typically have a smaller footprint and often use modular construction methods, they generally use more power than the typical colocation facility. The most power-hungry of all data centers are those used for AI applications. These can use up to five times the power of other data centers.
Power use in data centers is of prime importance and greatly guides trends in the sector. For example, as many data center companies want to make their environmental footprint greener, they are arranging purchase agreements and working with power developers to provide renewable energy for their facilities. Demand is being placed on the oil and gas sector to provide the fuel needed for these operations. Power supply can be a constraining factor where supply may not be enough to meet anticipated demand. Areas of northern Virginia, which has one of the strongest concentrations of data centers in the world, are having to curtail development because of an inability to supply these facilities with the power that they will require.
While data centers are typically short-lived projects, often moving from planning to completion within 18 months, power generation and transmission projects take much longer to permit than a data center does, putting a constraint on power supply for new data centers. Many developers are considering on-site renewable energy generation, and cutting-edge power sources such as geothermal power (depending on location) and small modular reactors are being considered as future means of power.
Power demand required by data centers is expected to rise from 17 gigawatts (GW) to 35 GW by 2030 in the U.S., and consumption throughout the world is set to rise from 53,000 terawatt-hours to 71,000 TWh by 2050. Questions of whether the power industry can keep up with this growth are of great importance for future development.
Semiconductors
Like data centers, semiconductor plants have seen strong investment since the onset of COVID-19, and this is expected to continue growing in the coming years as the tech sector develops and new technologies emerge.
Many of the world's semiconductors are produced in China and Tawain, near automotive- and electronics-manufacturing sites, but the sector's footprint is becoming more widespread. A prominent example of this can be seen in the rapid development of semiconductor fabrication plants (fabs) in the U.S. when the CHIPS and Science Act of 2022 began providing tax incentives for the construction of new fabs in the U.S. Two of the sector's biggest players, Intel and Taiwan Semiconductor Manufacturing Company Limited, have combined active projects worth more than $120 billion in the U.S. alone and $214 billion throughout the world.
Like the data center sector, semiconductor manufacturers also are concerned about power supply. As chip sizes shrink, which typically happens over the passage of time, the energy required to manufacture them grows significantly. Chip-makers are attempting to reduce this energy consumption through new technologies and adopt renewable energy to power plants. In addition, gas abatement and recycling technologies also are being studied as a way to reduce environmental impact, as are greener, alternative chemicals used in the manufacturing process.
In summary, the data center and semiconductor sectors are both striving to develop the latest technologies while balancing energy consumption and environmental, social and governance (ESG) ambitions. The two sectors are seeing rapid development in all parts of the world, and this strong buildout is presenting many new and unprecedented challenges as consumer demand continues to escalate.
If you missed this webinar or would like to revisit some of its highlights, the presentation soon will be available in Industrial Info's On-Demand Webinar Library.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
