Server shipments forecast to rise 5.5% as Arm gains ground

Sophie Lindqvist

DIGITIMES Research expects global server shipments to reach 4.89 million units in the fourth quarter of 2026, up 5.5% from the third quarter. That would be the strongest sequential growth of the year, according to the research firm. The forecast is not an actual shipment result.

The research firm attributes the increase to new Arm-based systems from large U.S. cloud providers, while Nvidia’s Vera Rubin AI platform remains supply constrained. The forecast therefore combines stronger cloud deployments with a still-tight component chain. Demand is returning. Capacity is not yet secure.

Why did the third quarter disappoint?

DIGITIMES estimates that third-quarter 2026 shipments fell 0.8% from the second quarter. The result fell short of its earlier growth expectation. Tight CPU, memory and IC substrate supplies held back system builds, leaving the forecast recovery to start from a weak base.

Large U.S. cloud providers’ combined purchases fell 1.3%, according to DIGITIMES. Server brand shipments fell further, although no percentage was given for that decline. Shortages and server price increases weighed on server brands at the same time, while cloud purchases also declined, leaving no single explanation for the third-quarter slowdown.

How much can Arm gain in server CPUs?

TrendForce estimated in October that Arm-based chips passed 10% of the server CPU market only in 2025. It expects the share to top 20% in 2026 and reach about 30% in 2027. These are analyst estimates, not Arm-reported shipment or revenue figures.

Arm said last week that its data-center royalties doubled. The company supplied no absolute royalty value in the cited statement, so the claim cannot establish revenue scale or the period over which the doubling was measured. TrendForce also expects Nvidia’s Vera CPU to ramp substantially next year, a factor behind its Arm-share forecast.

Where does the supply bottleneck sit?

Packaging remains a constraint for AI chips. Shang Hou, MediaTek’s deputy general manager of advanced packaging, said AI demand has turned TSMC’s CoWoS packaging from an “interesting” technology into a headache. He described wafer, packaging and substrate capacity as an “urgent priority” for MediaTek.

The research identifies three wider constraints:

• Tight CPU supply held back third-quarter system builds.
• Memory remains tight across Nvidia’s supply chain.
• IC substrate shortages also restricted system builds.

That places the Vera Rubin constraint in the same commercial frame as the third-quarter delays, since CPUs, memory and substrates already limited output and advanced packaging remained another explicit bottleneck. No numerical CoWoS, substrate or memory capacity figure accompanies the warning.

What could derail the fourth-quarter rebound?

The 4.89-million-unit forecast depends on two conditions that the cited research does not report as achieved: new Arm-based cloud systems entering volume and constrained components reaching server builders. Vera Rubin supply remains an explicit risk. No unit target or shipment schedule appears for the platform.

Pricing already matters to the commercial outcome. DIGITIMES says shortages combined with server price increases as server brand shipments fell further in Q3. The research gives no forward price forecast, so a claim that prices will normalize would go beyond its evidence. Capacity must improve alongside demand.

What should buyers watch next?

Three measures will test the forecast. First, actual Q4 shipments must approach 4.89 million units. Second, Arm’s share must move beyond TrendForce’s 20% estimate for 2026. Third, CPU, memory, IC substrate and CoWoS capacity must loosen enough to prevent another build slowdown.

The research provides no numerical CoWoS capacity target, memory supply figure or Vera Rubin shipment plan. It also does not quantify how much server prices changed during Q3. Those omissions limit precision, but the direction is clear: demand is returning while supply remains the constraint.

The next test is whether packaging and memory capacity can expand before fourth-quarter demand peaks, because a 5.5% shipment rebound depends on constrained components reaching server assembly in time.