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Demand for AI is growing rapidly due to advances in digital technology and the widespread use of smartphones, and this in turn is driving demand for data centers to store information servers for businesses and other organizations.

Why does the growing demand for AI require data centers in the first place?

Expanding use of AI and data centers

The digitalization of society, known as “DX” (Digital Transformation), is progressing. Businesses are increasingly using AI, with “ChatGPT,” in which AI answers questions in natural sentences, in the limelight, and an ever-increasing number of services requiring quick information processing, such as smartphone shopping sites, social networking sites (SNS), and game applications.

As the scale of AI use expands and demands become more diverse every day, companies need stable and secure data and system operations.

Data centers are specialized facilities where IT equipment, network equipment and servers are stored securely.Even when IT equipment should be managed in-house, there may be insufficient space and security measures. To solve these various problems, more and more companies are turning to data centers. Data centers are excellent for operating and managing IT equipment and can meet the requirements of various companies.

Massive adoption of AI has led to increased investment in data centers

Since November 2022, the mass adoption of AI, symbolized by the huge success of ChatGPT, has generated California gold rush-like interest. The investment market is once again taking advantage of the Silicon Valley investment zeitgeist to reward pioneering companies like NVidia, Google, and Microsoft that have earned first-mover advantage through extensive R&D efforts. Investors are naturally looking for the next group of beneficiaries, avoiding high-risk or loss-making companies.

NVidia’s Q1 2024 earnings call was a turning point for the AI supply chain, as it highlighted the recent phenomenal demand growth for Nvidia’s hardware, leading analysts to revise their full-year revenue estimates upward by about 40%. (Source: Refinitiv)

The company mentioned “data centers” more than 56 times when explaining its better-than-expected revenue outlook during its May 24, 2023 investor earnings call. It was clear that the company’s advanced GPUs are entirely dependent on a high-performance, secure, and stable data center environment.

Issues with AI-enabled data centers

AI-enabled data centers also have their problems. Machine learning and AI applications require a lot of power for HPC and GPU servers. These servers consume so much power that they cannot fit in a single rack. The high power consumption of HPC and GPU servers is uncontrollable, so the servers accumulate a lot of heat and need to be cooled properly. Therefore, AI-enabled data centers are further required to improve power-saving and air conditioning technologies.

Summary

In this issue, we have discussed the growing use of AI and the demand for data centers.

Data centers will continue to play an important role in providing consumers and businesses with new AI tools as a critical infrastructure for the digital economy. They will also be required to provide services that meet the technological trends and business needs of companies.

We hope that data center operators will ride the wave of DX by carefully assessing and discussing the issues involved.