Up to 50% of orders from cloud data center operators are related to AI applications, according to Taiwan-based server ODM Wiwynn.
The main difference between AI servers and general servers lies in the number and type of GPUs used, said Wiwynn CFO Harry Chen. While improvements to CPUs and GPUs have increased performance, Chen added that they have also increased requirements for wattage, power consumption, cooling, and memory and transmission speed.
Although the average unit price of AI servers is higher, Chen pointed out that due to higher efficiency, fewer servers are needed.
Wiwynn is currently focusing on strengthening its position in the supply chain and figuring out how to provide more cooling solutions, Chen said.
AI-related servers accounted for 20% of Wiwynn's shipments in 2022. Gross margin for fourth-quarter 2022 and overall 2022 increased on year, posting 8.4% and 8.2%, respectively.
Wiwynn expects AI-based servers will become a new trend in cloud data centers in 2023-2024.
Wiwynn claims to be the "purest" cloud data center server ODM, with its revenue mainly coming from two US-based cloud service providers: Microsoft and Meta. Microsoft, the main shareholder of ChatGPT developer Open AI, plans to integrate ChatGPT into Microsoft Azure, Bing, and Edge. Meta is currently developing an AI language model called Toolformer.
Other cloud service providers including Amazon Web Services (AWS) and Google are also stepping up the development of AI-related products. Server and other hardware architecture required by their data centers are bound to change accordingly, sources said.
Chen noted that customers want an architecture that can be used by both past and future AI, making the current period the transition to the new age of AI.
Wiwynn has increased its investments in response to future customer demand, announcing a capital expenditure of NT$5 billion (US$163.86 million) in 2023, up from NT$1.5 billion in 2022. Chen attributes the jump to the anticipation of future business opportunities and preparation for geopolitical changes.
Wiwynn plans to increase its current production capacity by 50% in 2024, which will mainly take place in Malaysia, Mexico, and Taiwan.
Wiwynn noted its factory in Malaysia is currently building a backend assembly line that is expected to being production in June 2023, as well as a PCBA manufacturing plant that will finish construction in second-half 2024. Wiwynn's board of directors approved a capital increase of US$50 million for its Malaysian subsidiary.
Wiwynn also announced a capital increase of US$400 million for its US subsidiary. Wiwynn does not have a factory in the US, but its US subsidiary is responsible for distribution in North America. The capital increase is a response to capital needs and rising global interest rates.
