The financial results for the third quarter of 2024 indicate a trend of stabilization within the broader market for networking equipment and components, largely driven by the ongoing boom in AI. Major tech companies have significantly increased their investment levels in 2024 compared to the previous year, reflecting a notable rise in their combined spending by 59% year-over-year in Q3 2024 (Figure 2). The surge in investment continues to be predom- inantly directed towards the development and enhancement of AI infrastructure. The focus of these technology giants includes the acquisition and upgrading of servers, the expansion of data centers, and the optimization of networking equipment. A significant emphasis is being placed on optical fiber which is essential for supporting the high-speed data transfer requirements of AI applications. The increasing capital expenditure underscores the strategic importance of supporting AI initiatives to meet the demands of a rapidly evolving digital landscape. A major source of uncertainty in accurately forecasting the future energy requirements of data centers stems from the rapid advancement and integration of AI technologies into more business sectors and consumer activities. The recent explosion of generative AI models
into the public consciousness has intensified, as these technologies continue to evolve and expand their influence, potentially leading to even greater energy demands in the years to come. EPRI research revealed that data center power demands are concentrated in a few regions in the U.S. (Figure 3).
FIGURE 3: 2030 projected data center share of electricity consumption (assumes average of the four growth scenarios and that non-data center loads grow at 1% annually). (Source: EPRI May 2024)
FIGURE 2: November 2024: First signs of a recovery in the telecom market. ( Source: LightCounting Market Research )
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