After Record $50 Bn Quarter, Cloud Firms Face Chip Deficit

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Driven by remote working and learning, the global Cloud infrastructure services increased 35 percent to record $49.4 billion in revenues in the third quarter (Q3) this year. However, the impact of the global chip shortage is imminent in the upcoming quarters.

Cloud services spending is still being affected by the digital transformation efforts required to maintain business continuity during the pandemic-related disruptions, according to a report by market research firm Canalys.

In response, the major cloud services providers have emphasized geographic data center expansion to meet the rising demand.

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“Overall compute demand is out-growing chip manufacturing capabilities, and infrastructure expansion may become limited for the cloud service providers,” said research analyst Blake Murray.

Amazon Web Services (AWS) accounted for 32 percent of total cloud infrastructure services spent in Q3 2021, making it the leading cloud service provider.

Microsoft Azure was the second-largest cloud service provider in Q3, with a 21 percent market share

Google Cloud was the third-largest provider and grew 54 percent to account for 8 percent of the market.

“Besides managing supply chains to the best of their abilities, the providers building an advantage are focused on developing their go-to-market channels along with their product portfolios to catch up with an increasingly wide variety of customer use cases that has fuelled demand since the start of the pandemic,” Murray explained.

The impact of the global chip shortage is imminent, as data center component providers are seeing longer lead times and higher prices that will be passed on to the largest providers.

“The hyper scalers have now shifted focus to advancing industry-specific service portfolios and growing their channels to successfully bring these increasingly diverse sets of products to market,” the report mentioned.

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