How AI Data Centers are Changing the Wire & Cable Market
The data center industry is undergoing significant expansion to support AI growth and its need for more power and computing memory. According to Goldman Sachs Research, data center power consumption will grow exponentially over the next decade, largely driven by the rapid expansion of AI and its insatiable power demand. The construction of new data centers to support the expanding needs of AI will be an area of growth for wire and cable manufacturers for years to come.
Evolving Power and Cable Demands for AI Infrastructure
AI workloads require more than just basic power infrastructure; they demand high-density power systems capable of supporting larger and more powerful equipment. According to McKinsey, the increasing energy needs of AI chips are prompting some data center operators to rethink their power supply units. Many are now considering 48-volt power systems as an alternative to the traditional 12-volt setups to reduce energy loss and improve system efficiency. This shift is already reshaping the wire and cable market, as next-generation data centers require increasingly sophisticated wiring and electrical systems to handle higher energy demands and faster, more reliable connections.
The overall capital spending on mechanical and electrical systems for data centers is expected to exceed $250 billion by 2030, and the total investment needed to scale data center infrastructure could top $1 trillion across the global ecosystem, according to McKinsey.
Powering AI drives a staggering need for data center resources. Goldman Sachs estimates AI will account for a 200-terawatt-hour increase in annual data center power consumption between 2023 and 2030. For wire and cable manufacturers, this means a growing need for advanced electrical and mechanical components to support these systems. As AI technologies continue to grow in importance, data centers in both developed and emerging markets will need vast quantities of infrastructure to keep up.
AI-Driven, Global Investment in Data Centers
Goldman Sachs projects that U.S. utilities will invest $50 billion to build new power generation capacity specifically for data centers by the end of the decade. Europe will require an estimated $861 billion to upgrade transmission and distribution systems and an additional $893 billion in renewable energy generation to meet growing power demand. Emerging markets in countries such as Malysia, Brazil and South Africa will also see strong data center growth to adapt to increased AI resources according to Datacenter Dynamics.
This global build-out represents a significant opportunity for wire and cable manufacturers, as both developed and emerging markets will need vast quantities of electrical and mechanical components to support new data center installations.
Opportunity for Wire & Cable Manufacturers
Wire and cable manufacturers stand to benefit from new data center construction. Providing power infrastructure and fiber connectivity to new data center sites will be a critical area of focus for manufacturers that support this expanding market.
Larger cables capable of handling higher currents and voltages will be in high demand. The rise of AI and cloud computing requires ultra-fast data transmission, which means more fiber optic cables will be needed to support high-speed connectivity. Renewable energy infrastructure build out will also be a high priority according to Data Center Frontier, as it is often included in a new “Bring Your Own Power” approach in the data center industry. “Bring Your Own Power” encourages data center operators to take a “more active role” in generating their own power, often through installing renewable energy generation equipment or microgrids.
Manufacturers who can position themselves in regions with favorable regulatory environments, abundant low-cost land and cheap renewable energy generation prospects will have a distinct advantage in securing data-center-related growth.
Now is the time to start preparing for increased wire and cable demand. Begin investing in research and development for next-generation products if you haven’t already and work to strengthen supply chain resilience for critical materials and components. Visit M. Holland’s Wire & Cable market page to see how we can help meet the industry’s diverse needs.