Hyperion: HPC Market is Stabilizing and Headed to $50B by 2026

By John Russell

May 30, 2022

While echoes of the pandemic continue rippling through the HPC landscape – primarily lingering supply chain issues – the outlook for the HPC market writ large is strong, according to Hyperion Research, which delivered its ISC 2022 HPC market update today. Last year, HPC spending (on premise, cloud, and AI) neared $35 billion and is on track to reach nearly $40 billion in 2022 and $50 billion by 2026 according to Hyperion.

“The overall market in 2021 did very well. We saw an additional growth again, which is a surprise given the supply chain issues [and] Covid issues. In this chart (below), we’re showing our view of the whole HPC spending on premise, and we add in the cloud portion – it’s what HPC end users spend in the cloud, it’s not what cloud providers are purchasing. [The] total was roughly $35 billion last year,” said Earl Joseph, Hyperion CEO.

Vendors, said Joseph, have worked hard to address supply chain issues and had devised a variety of solutions. The problem will persist but lessen over the next two years. “Given all that, we expect to see continued growth in 2022,” said Joseph.

Unlike the uncertainty surrounding most recent forecasts, the latest Hyperion outlook felt like a cautious step towards normalcy. It highlighted mostly familiar dynamics – the spike in supercomputer sales, rise of HPC-in-the-cloud, AI computing everywhere, the HPC talent scarcity, and ongoing rivalry with China. There were also a few newer trends. Hyperion forecast declining exascale revenue in out-years of that program (all booms wind down), intensifying pressure to seek sustainability (energy), presented a deeper look at interconnect adoption trends, and snapshot of the quantum computing market which hit $490 million in 2021.

The Hyperion update covered too much material for a single article and Hyperion has made the slide deck and recorded segment presentations available from its website.

To a considerable extent, the list of leading vendors remained the same. “HPE continues to be the market leader, especially with its acquisitions of Cray and SGI. Dell is a very strong second in the market. And then we see a number of vendors here that are growing very quickly. Atos is doing very well, Penguin is growing, and the Chinese providers are doing very well also,” said Joseph.

There was, of course, a fair amount Euro-centric data and focus point presented. Hyperion analyst Mark Nossokoff handled most of the Euro-overview.

“EU is projected to grow at a CAGR of 7.9 percent between 2021 and 2026, ahead of the overall market CAGR of 6.9 percent. The [EuroHPC] Joint undertaking continues making progress with the execution of its strategy for HPC leadership in the EU. Last summer, the JU was extended through 2027 with a commitment of funding up to 7 billion euros, inclusive of matching funds from industry and other public private sources,” said Nossokoff.

“The JU is focused on their strategic pillars of technologies, infrastructure, applications, and broader usage and skill sets. [Continued execution of the strategy should help it towards achieving its HPC leadership aspirations. Recent JU investments have supported a total funding of approximately 360 million euro, of which approximately 163 million were provided directly by the JU – this was for five petascale and three pre exascale systems. Additionally, the JU is tasked with developing a new quantum computing ecosystem alongside the HPC ecosystem,” he said.

Nossokoff also highlighted HPC efforts in the UK, singling out, for example, the Cambridge-1 supercomputer, owned and operated by Nvidia. “The final item I’ll mention is that the selection of two locations within Europe to increase worldwide semiconductor capacity. While the chips expected to be produced at these sites will extend beyond HPC use cases, Intel’s selection of Ireland and Germany for future chip manufacturing [shows] strong support of and confidence in the continent to provide the necessary talent and business climate to eventually ease the current global supply chain challenges,” he said.

Hyperion included an overview of the ongoing, global exascale race. This section of the update was presented by Bob Sorensen, SVP of research and chief quantum analyst. Most of the material was already broadly familiar to the HPC community. Earlier in the day, of course, Frontier’s 1.102 Linpack exaflops performance placed it atop the Top500 and officially began the exascale era.

Sorensen reviewed China’s exascale efforts which have been difficult to pin down as tension with the U.S. have escalated. “In 2018, the Chinese announced that they were going to have three different of different prototypes from three different vendors using basically a different architectural emphasis. But all of them really tried to concentrate on using indigenous Chinese technology to build those particular systems,’ he said.

“So officially we had the Sunway Pro OceanLight system was targeted for about 1.3 exaflops, 35 megawatts power consumption, [and] comprised of over 38 million cores. We also had the Tianhe3, and Sugon (slide below). That’s the official status of what’s going on. But there’s some unofficial realities that we’re trying to track and make a little more sense of as we as we go forward,” he said.

“Despite a lack of public official announcements, there’s good information that the Sunway Pro OceanLight system has been up and running since March 2021 doing good work; there have been a couple of technical papers coming out but no submissions to the top 500 list. We have information that says that Tianhe-3 has also been up and running for the last six months,” said Sorensen.

It’s hardly news that use of cloud-based HPC is growing but there are changes in use patterns, reported Hyperion.

Joseph noted, “Last year, we picked up something for the first time in our surveys, and that was that HPC and AI buyers around the world, were planning to shift some money from on-premises spending into the cloud. This is really a fundamental change. Prior to that, we saw a few sites here and there, but we didn’t see this as a trend. Now, this isn’t saying that on-prem computing is going away. That [on premise purchases] continues to grow at a very healthy pace. But it’s showing that cloud computing is growing very quickly.”

Hyperion analyst Alex Norton provided the bulk of the cloud market update. “We project that the HPC cloud market, which as we track as end-user spending for running HPC workloads in the public cloud will exceed $11 billion by 2026. This represents a more than 17.5 percent CAGR over the five years from 2021 to 2026. Within that forecast, roughly one third of the cloud revenue is spent on storage specific components, while the other two thirds are spent on compute instances, software licenses, services and other aspects of running HPC workloads in the cloud,” he said.

Echoing Joseph’s earlier comments, Norton said, “A recent study that we conducted showed that almost 50 percent of the users that we talked to, are altering their future deployment plans based on the cloud being incorporated in their planning and their technology roadmaps. So, what we’ve seen is that cloud is being considered side by side with on premises resources rather than as a complementary add on solution.”

Sorensen provided Hyperion’s view of the quantum market. In December, Hyperion surveyed roughly 112 quantum computing suppliers and sized total 2021 quantum revenue at $490 million. Hyperion estimates the growth rate between 2021 and 2024 to be about almost 22 percent per year.

“This drives us to a global quantum computing market in 2020, for approaching about $900 million,” said Sorensen. “[One of the] interesting things that came out of this particular survey was about 49 percent of the companies had less than 500,000 worth of US dollars in revenue in 2021. About half had no revenue. So, we’re still looking at a sector where a significant portion of players are living more from investment input than they are from revenue generation.”

“We did find a number of companies, about 7 percent of those we spoke to, that had more than $10 million of quantum-computing-related revenues going forward. So, there are some players out there who are starting to see some significant revenue streams, but nothing that comes near what we see in the classical counterpart,” he added.

There are still so many unknowns in quantum computing. Sorensen presented a chart of quantum hardware suppliers, noting “I’ve just put down the idea of looking at hardware developers that I can identify. And at this particular point in time, I found about 44 organizations around the world, commercial players that were interested in development that leads to fielding a quantum computing hardware product (slide below).

“You can see here the wide distribution – United States, UK, China, Canada, a whole host of countries out there right now with identified commercial activities in just hardware. And what I find most interesting and the other takeaway here is that there is no agreed upon quantum computing modality yet. There are very many different options out there and we really haven’t settled on who wins yet,” he said.

“We also did an end user study recently to kind of get a sense of that. We knew what was going on the push-side of quantum computing, rather than what [was going on] with the pull-side. So, we ended up talking to about 415 companies worldwide, who are either quantum computing end users in some respects [now], or considering doing that at some point in the future. And of 415 companies, we found that about 70 percent of them already have some kind of in house quantum computing program, and 20 percent plan to do so in the next few years. If you do the simple math [it] says about 90 percent of the companies that we spoke to right now are interested in having some quantum computing activity within their organization,” said Sorensen.

Bottom line: Expectations are clearly rising among suppliers and potential end users in the nascent quantum computing and broader quantum information sciences markets.

There was a great deal more to Hyperion’s update. It’s best to seek the slides and access to the recorded presentation from Hyperion.

Slides courtesy of Hyperion Research

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