The global server market contacted for the first time since 2016 after a year of historic growth, signaling an abundance of IT capacity and economic uncertainty as global trade frictions grow.

Despite a 11.6 percent year-on-year decline, International Data Corp. also reported in its latest quarterly survey of the worldwide server market that Hewlett Packard Enterprise gained ground on market leader Dell Technologies. IDC now ranks Dell and HPE as the top two server vendors as a result of a large revenue decline (13 percent) for Dell over the same quarter last year.

Overall, global server sales during the second quarter totaled just over $20 billion.

Meanwhile, HPE’s global server sales benefitted from its joint venture with H3C joint venture in China, where server sales remain strong. As a result, IDC report a small (3.6 percent) year-on-year revenue loss for the combined HPE-H3C venture. Hence, IDC declared a statistical tie for the top spot in its global server rankings.

The Chinese server market continues to expand, with domestic vendor Inspur registering robust growth compared with the same quarter last year. IDC reported that Inspur has jumped ahead of Lenovo, IBM and other server makers, gaining 7.2 percent of the worldwide server market as its revenues jumped more than 32 percent year-on-year.

That increase also reflects a joint venture between Inspur and IBM launched last year and based on IBM’s Power architecture. For its part, IBM saw its quarterly server revenues decline 27.4 percent on an annual basis.

The server market contraction also is a function of healthy server sales during the previous year. “The second quarter saw the server market’s first contraction in nine quarters, albeit against a very difficult compare from one year ago when the server market realized unprecedented growth,” said Sebastian Lagana, IDC’s research manager for infrastructure platforms and technologies.

The market tracker also attributed the slowdown to a decline in server purchases by cloud services providers and hyper-scale customers along with a trough in what it called the cyclical non-x86 processor market.

Other factors weighing on the enterprise server market included “capacity slack” among server buyers and “macroeconomic uncertainty,” IDC said. The latter is a reference to the ongoing U.S.-China trade war that has complicated technology supply chains.

Despite booming server sales in Asia, IDC reported an 8.7 percent decline year-on-year for Chinese server revenues. Canada was among the few bright spots, with quarterly revenue growth up 13.4 percent over the same period last year. The combined Europe, Middle East and Africa market was up a modest 2 percent, IDC reported.

The x86-based server market declined 10.6 percent during the last quarter, while servers based on non-x86 architectures fell 21.5 percent year-on-year.